Credit Card Late Payments Fall

Credit Card Delinquencies Fall

Credit Card Delinquencies Fall


In a positive sign for the United States economy, in quarter 1 of 2013, credit card late payments have fallen. That is an indication that borrowers are getting on top of their debt obligations and making their credit card payments on time.

It also reflects that consumers are on top of their seasonal debt, with a lot of the credit card debt being paid off now a result of 2012 Christmas spending.

Credit card late payments fell to 0.69% in the first quarter – a figure that was 0.85% in the first of 2012, so a significant 19% improvement. The delinquency rate for the first quarter was also down compared to the final quarter of 2012, which came in at 0.73%.

Borrowers are being responsible with their debt obligations despite a 2% increase in social security taxes and delayed federal income tax returns.

The rate is still above the average in past years though, with the lowest late payment rates being below 0.6% in the USA. The care delinquency rate has been shocking in recent years however, averaging about 1% since 1992, making this 0.69% figure a very strong sign that people are managing their debt burden.

It is a trend for American consumers to stop spending very quickly and attempt to reign in debt when the economy slows. The end of the housing bubble actually saw consumers start to pay off their credit cards more quickly as they attempted to get their financial matters in order. That was partially due to people with mortgages attempting to clear their credit card debt so they could focus on their mortgage.

The unemployment rate in the USA is still high at 7.5% but there are some promising signs that the economy is on it’s way back to good health. Home values are increasing again, consumer spending has gradually come back and the stock market is having a great year.

The improvement of the economy make consumers want to spend, but the memory of the GFC is still fresh in their minds, making many consumers much stricter in managing their financial affairs. Most consumers want to minimize unnecessary debt, just in case they are laid off of have some other large financial hurdle.

That aversion to unnecessary debt is one of the reasons why the average credit card debt in the United States has fallen by nearly 2% to just over $4870. In the fourth quarter of 2012 the average debt was $5122, so a pretty significant drop when you factor in the holiday season’s expenses.

Consumers are also obtaining less credit cards, most likely part of the same push by consumers to get their debt under control and be stricter in their spending.

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