Consumer Comeback Blog

Credit Card Delinquency Rates Drop to 11-Year Low

Consumers are becoming more cautious about the way they use credit and more dutiful about paying down debt on time, the most recent consumer credit delinquency reports indicate. According to the American Bankers Association, credit delinquency in the second quarter of 2012 is at an 11-year low.

Bank card delinquencies, or those that are 30 or more days overdue, fell 15 points to 2.93%, which is the first time it was under 3% for the first time since 2001, and less than the 3.91% 15-year average.

The composite ratio, which tracks delinquencies in eight closed-end installment loan categories, fell 11 basis points to 2.24 percent of all accounts in the second quarter, below the 15-year average of 2.40 percent. The ABA report defines a delinquency as a late payment that is 30 days or more overdue.

“Consumers are saving more and borrowing less as they work to pay down debt at a faster rate,” James Chessen, ABA’s chief economist said in a press release. “Economic uncertainty has made consumers hesitant to take on new debt, and building a stronger financial base has become a priority.”

While this is positive news for overall picture of credit card debt in America, other areas failed to experience the same improvements in the second quarter. For example, all three categories of home-related loan delinquencies increased.

“While the housing market appears to have turned a corner, we are many quarters away from seeing improvement filter through to reduce home-related delinquencies,” Chessen said.