The national credit card delinquency rate, or the rate at which payments are 90 days or more past due, was .6 percent at the end of June, which is down 19 percent from the first quarter and 35 percent from the same time in 2010.
The decline is fueled by several reasons:
1. Total consumer debt fell $50 billion during the second quarter, according to the New York Federal Reserve Bank.
2. Greater scrutiny means credit is harder to get, TransUnion says.
3. Card companies have written off billions in debts since the start of the recession. But charge-offs have had a less significant impact on the delinquency rate than consumer behavior. A TransUnion analysis found consumers made an estimated $72 billion more in payments on credit cards than purchases between the first quarters of 2009 and 2010. Five years before, they made $2.1 billion more in purchases than in payments.
4. Consumers increasingly are paying off credit card debt before their mortgages. “If you bought your home for $300,000 and the house across the street is selling for $130,000, you have less motivation to pay your mortgage,” says Ezra Becker, vice president for research at TransUnion.
Source: USA Today, August 2011