The national credit card delinquency rate (the rate of borrowers 90 or more days past due) decreased for the sixth consecutive quarter, dropping to 0.6% at the end of the second quarter in 2011. This is the lowest mark observed in 17 years. Credit card debt per borrower increased $20 in the quarter to $4,699, though it remains near record-low levels (and yet still at a level that is far too high).
Although credit card delinquencies were expected to drop, the data released today shows credit card delinquency rates improving by more than at any other time since the recovery began in 2009, both on a quarter-over-quarter basis (-18.9%) and on a year-over-year basis (-34.8%).
“National credit card delinquency rates have fallen to levels not seen since 1994 as consumers continue to tighten their spending,” said Ezra Becker, vice president of research and consulting in TransUnion’s financial services business unit. “TransUnion believes that the recovering economy is only indirectly impacting delinquency rates. More important and impactful to the decline in bank card delinquency are that consumers are using credit cards more responsibly; a large number of delinquent accounts have moved to charge-off status; and lenders remain conservative in their underwriting.”
The record low-level of credit card debt that has continued post recession is supported by a separate TransUnion credit card deleveraging analysis released in July. 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 good news. We still need to reduce pay off much more of the excessive debt we took on living beyond our means the last few decades, but at least this is a small positive step. Overall consumer debt increased in the 2nd quarter, according to the Federal Reserve, and stands at over $2.45 Trillion. Revolving debt (credit cards) decreased slightly but non-revolving debt increased more. Consumer debt peaked near $2.55 Trillion in 2009 and recently bottomed just below around $2.4 in 2010. Consumer debt totals still need a great deal of improvement.