More consumers are paying on-time and avoiding fees…
According to the credit reporting agency TransUnion, late payments on credit cards carrying the MasterCard and Visa logos fell to 1.1% for the June to September period, down nearly 6% from the previous quarter. Since delinquency rates typically rise in the third quarter, the decline, together with the 11% decline from the first quarter, indicate that consumers are handling debt better. In addition, the third quarter rate for late credit card payments of 90 days or more past due (1.1%) nearly matched that of the previous year (1.09%). Delinquencies were highest in Nevada (1.98%), Florida (1.47%), Arizona (1.35%) and California (1.33%), lowest in N. Dakota (.66%) and S. Dakota (.70%). TransUnion’s statistics are culled from approximately 27 million anonymous, randomly sampled individual credit files.
TransUnion figures showed the average balance on outstanding bank cards dropped to $5,612 from the previous quarter’s $5,719, and from $5,710 in the 2008 third quarter. Also during the third quarter, consumers contributed less of their paychecks to savings as they worked to pay down debt. In September, personal savings account rates dropped by .30% from the previous month. The decline in credit card delinquency follows TransUnion data that showed the pace of growth for mortgage delinquencies also slowed in the third quarter.
Financial experts consider several factors responsible for the lower late payments. The main factor is the unemployment rate passing the double-digit marker, prodding consumers to focus on paying down their outstanding debt. Banks and financial institutions have tightened their purse strings, making credit less available and at higher interest rates. They’ve also cut credit limits and raised rates in anticipation of new federal laws, giving fewer options to consumers.
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