Credit card late payments hit 17-year low

NEW YORK - Credit card users are so focused on keeping their accounts in good standing that they've driven the rate of late payments down to its lowest level in 17 years.

The national credit card delinquency rate, or rate of payments 90 days or more past due, fell to 0.60 percent in the second quarter, down from 0.92 percent a year ago. That's the lowest rate since 1994, according to credit reporting agency TransUnion.

Delinquencies were expected to drop, but the improvement in that April to June period was faster than forecast.

And the improved payment habits came despite increased use of credit cards, based on quarterly data reported by banks that issue Visa and Mastercard-branded cards and data from American Express Co. and Discover Financial Corp.

TransUnion also saw higher card use, reflected in a slight uptick in the amount of debt card users carried during the quarter. 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. Even so, that amount is down more than 5 percent from the $4,951 average in the second quarter of 2010, and is 16 percent lower than the peak average debt of $5,575 in the first quarter of 2009.

How I-D thieves, credit card crooks do it

The overall improvements stem from a variety of factors, said Chet Wiermanski, global chief scientist for TransUnion's financial services business.

"Not only do we have consumers that are using their debt more responsible and taking out less debt, they've also cut back on the number of the cards they carry," he said.

Also contributing is the fact that banks have tightened their standards for approving card applications. After writing off record levels of uncollectible debt in recent years, most banks won't issue cards to applicants with low credit scores. They have also cut back credit limits on existing cards, making it harder for individuals to run up huge balances.

And Wiermanski noted that debit card use continues to rise, which reflects more cautious spending by consumers.

TransUnion expects the delinquency rate to continue drifting down for the rest of this year, but didn't offer a specific projection. "It's hard to forecast where this is going when you've reached a historical low," Wiermanski said. "Because you're in uncharted waters."

[felbranson]

I think the big story out of TransUnion's and Experian's latest studies is that Americans are now making their credit card payments on time at a much higher rate than they did in 2007, while exactly the inverse is true for mortgage payments, with 25 percent more consumers paying their mortgage 60 days late than did in 2007. http://blog.unibulmerchantservices.com/americans-continue-paying-down-credit-cards-before-mortgages

[gruven13777]

It's because you can't get a decent job now if you have a low credit score. An employee's self-worth in the business world is not tied to how much education or work experience they have, it's "how good is your credit score."

[jtdev1]

Late payments at 17 year low and interest rates at 100 year HIGH...

GO figure...

[tmittelstaed]

"....Also contributing is the fact that banks have tightened their standards for approving card applications. After writing off record levels of uncollectible debt in recent years, most banks won't issue cards to applicants with low credit scores. They have also cut back credit limits on existing cards, making it harder for individuals to run up huge balances..."

This is not exactly true. If you have good credit then the banks are still hell bent on raising your credit limit - I just got another $2000 credit limit increase without even asking for it on one of my cards and I pay off my balance in full every month.

I assume their game is still to get you stuck paying them their minimum balance every month for the next 1000 years....

[RedDeath50]

This is not exactly true. If you have good credit then the banks are still hell bent on raising your credit limit - I just got another $2000 credit limit increase without even asking for it on one of my cards and I pay off my balance in full every month.
===============================================
I had the exact same thing happen just last week. My only credit card, which I pay off the entire balance every month, was increased by a $1900 credit limit increase.

Go and figure...

[notyrants]

The global banking oligarchs? NEVER!!!!...they are the government.

[Jaylah54]

Now they're all screaming about the big overdraft charges on their debit cards because they haven't figured out how not to overdraw their accounts.

[notyrants]

What is it the banks collect from every debit card transaction? 34 cents?

[Jaylah54]

Banks charge "service fees" to merchants for both credit cards and debit cards.

But I'm not talking about the merchant fees. I'm talking about people that assume since they've got plastic in their pocket (a debit card) that must mean they have money and continually overdraw their accouts...thus getting slammed with heft overdraft fees.

Sorta like back in the old days with that old expression, "I can't be out of money, I still have checks left!"

[rignic2001]

Not rocket science, just blatantly obvious that if you eliminate all the really horrible people that habitually pay late by dumping them or allowing them to dump the card and leave you holding the loss on the debt then sure those rates will be so much lower. Especially when these people are the ones that made only minimum payment on 5,6,10, or more credit cards. When they are all screwed over by the habitually later payer then of course the rate of delinquency on credit cards will fall.

It's the same people that lied on their mortgage forms and purchased vehicles they couldn't afford by lying on those forms or by the husband being at one dealer and the wife at the other purchasing rediculously expensive vehicles to keep up the appearances and all the time not actually being able to afford to pay all this debt unless they have a guaranteed amount of over time from their employers which they lost when the economy went to crap.

Then the likes of TransUnion etc think that it is a wonderful thing, it is only an indication that credit reference agencies were not on the ball in the first place. They should not be patting themselves on their backs, they should be saying

"Crap! We really screwed up and now we are seeing how many people no longer have credit cards we allowed the creditors to grant approval for based on our records because we were too slow to react to the changes in their financial status when they piled on the debt!

Meanwhile here I am, an elderly man of 71 that is still working buying other peoples junk and selling it at fleamarkets to make ends meet so I can make sure that I pay my debt on time because that is what a financial obligation is.

[Jaylah54]

You know this is true. Credit card companies refer to people who pay off their balances in full every month as "dead beats" because they don't make any interest off of them.

Looks like those companies finally found out what a dead beat really is.

[alsoran89]

I'll bet the credit card companies hate that!!!! I wish they would all go broke!!!

[askagain]

alsoran89 - Not too smart. That would lead to more unemployment. A better idea is to limit credit cards to responsible people who can handle credit. For compaison, look at countries that don't have credit structures. Those people might as well be living in the medieval times.