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Credit card delinquencies plummet to 18-year low

by Peter Andrew
Credit card delinquencies plummet to 18-year low

Financial Literacy Month, which is April, could hardly have started better. On the event’s second day, the American Bankers Association (ABA) published data about financial delinquencies (accounts 30 days or more past due) for the last quarter of 2012, and the results suggest a truly spectacular swing away from the dark days of problem credit card debt during and immediately after the recent recession.

Credit card delinquencies hit 18-year low

After tumbling 28 basis points in that quarter alone, the delinquency rate ended the year at 2.47 percent. That doesn’t compare well just with the worst periods in recent years. It’s the lowest since the third quarter of 1994, and significantly below the 3.87-percent mark, which is the average rate for the whole of the last 15 years.

In a press release, ABA chief economist James Chessen attributed the improvement to better money management among consumers, coupled with a determination on their parts to create firmer financial foundations for their families. He went on:

While this conservative approach to credit may slow economic growth in the short-term, it portends stronger, more consistent growth in the future. The sharp decline in delinquencies reinforces the notion that the economic recovery has become more self-sustaining and is on a path to increased growth.

For more ideas surrounding Chessen’s view, see the recent IndexCreditCards.com article, Credit card debt problems could make a comeback.

Credit card debt only one area of improvement

The ABA’s report covered more than just credit cards. It also revealed delinquency rates for eight forms of closed-end borrowing (where a loan runs for a fixed period), and three of open-ended credit. Of these, only four — mostly minor — types of debt showed rises, and these were relatively small:

  1. Auto loans, but only those arranged through banks.
  2. Mobile-home loans.
  3. Marine loans.
  4. Non-card revolving loans.

Not all out of woods yet

Unfortunately, another survey, published the day before the ABA’s, showed that not all Americans are yet out of the financial woods. To mark Financial Literacy Month, the National Foundation for Credit Counseling (NFCC) and the Network Branded Prepaid Card Association (NBPCA) released the findings of its 2013 Financial Literacy Survey. These included less cheerful statistics:

  1. About 30 million Americans (13 percent) have concerns about paying their credit card debt.
  2. Roughly the same number had similar concerns about meeting student loan or other debt obligations.
  3. 57 percent of the survey’s respondents reported feeling worried about their lack of savings, either for emergencies or retirement.

However, there was some better news among the survey’s results. Only 4 percent of Americans feared foreclosure, while a healthy 20 percent said they had no financial worries at all.

Chase offers 30-minute financial workout

As part of its contribution to Financial Literacy Month, Chase is inviting all consumers to download a PDF of its publication, 30 Minutes to Financial Fitness. This 14-page brochure — branded for the AARP® Visa® Card from Chase, and mainly intended for those over 50 — contains much that could be useful for everyone, and covers the six main bases in a half-hour money workout:

  1. Save for tomorrow
  2. Budget your spending
  3. Pay wisely
  4. Manage debt
  5. Protect your identity
  6. Plan for tomorrow

Just click the link to download a copy. It’s free, and you don’t have to register to get yours.

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