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Credit card late payments at 17-year low

The delinquency rate on credit cards was down to its lowest level since 1994, according to second-quarter reports. Meanwhile, credit card borrowing is inching up.

By Karen Datko Aug 16, 2011 7:39PM

Give yourselves a collective pat on the back: More of you are paying credit card bills on time. In fact, the rate of delinquency -- payments 90 days or more past due -- was just 0.6% in the second quarter of this year, the lowest it's been since 1994.

 

On the other hand, the average amount of credit card debt is moving in the wrong direction (although it's still near record lows). "The average combined total debt for all major credit cards increased by $20 from the first three months of the year, to $4,699 per borrower," The Associated Press reports.  (Do you have too much debt? Try MSN Money's calculator.)

 

It wasn't just more responsible use of credit cards that caused the rate of late payments to drop from 0.92% a year ago, according to TransUnion, which released the information in a new report. It's also because "a large number of delinquent accounts have moved to charge-off status; and lenders remain conservative in their underwriting" -- meaning the worst offenders have been written off and card companies are continuing to be more careful about extending credit. Post continues after video about an earlier TransUnion report.

Well, perhaps they're loosening up just a bit. CreditCards.com reports:

During the second quarter of 2011, more consumers opened card accounts than closed them, and they had bigger credit limits to charge with, too, says the Federal Reserve Bank of New York's Quarterly Report on Household Debt and Credit. The number of credit card accounts jumped by 10 million, to 389 million, between April 1 and June 30. In addition, aggregate credit limits went up by $60 billion.

Will these trends continue? It's hard to say, particularly in light of recent economic events.  The New York Times reports:

There are already signs that the recent stock market upheaval, turbulence in Europe and gridlock in Washington over the federal deficit have spooked consumers. On Friday, preliminary data showed that the Thomson Reuters/University of Michigan consumer sentiment index had fallen this month to lower than it was in November 2008, when the country was deep in recession.

So, we're worried or just feeling blah, but perhaps we'll press on, whittling total U.S. consumer debt -- credit cards, car loans, mortgage, et al. -- to below the $11.4 trillion where it stands right now. Another TransUnion report had this startling piece of information:

The analysis found that consumers made an estimated $72 billion more in payments on their credit cards than purchases between the first quarters of 2009 and 2010. This is in contrast to just five years prior when consumers made an estimated $2.1 billion more in purchases than payments.

Are you making progress with paying off credit card debt, or are your personal circumstances driving you to use more plastic?

 

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