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A positive spin on more debt

By Janna Herron ·
Thursday, May 17, 2012
Posted: 5 pm ET

Americans are carrying more credit card debt than a year ago, but they are making their payments on time.

That's the latest takeaway from TransUnion's latest study on credit card debt and delinquency released Wednesday. The credit reporting bureau found that the average credit card balance per U.S. consumer rose 6.1 percent to $4,962 in the first quarter from $4,679 in the same period a year ago.

The rate at which borrowers were at least 90 days late on their payments slipped to 0.73 percent from 0.74 percent during the same time.

The increase in spending coupled with the delinquency rate that's below historic norms shows that consumers feel confident about charging more and being able to pay it off, says Ezra Becker, vice president of research and consulting in TransUnion's financial services business unit.

"The good news is that increased lending, particularly to nonprime borrowers, hasn't affected delinquency rates, which have remained unchanged over the past year," he says.

Almost a quarter of new cards issued were to consumers with spottier credit. That's consistent with last year's level and up from 21.8 percent from 2010. Becker also noted that superprime and prime consumers also have shown more interest in getting new credit cards.

The survey also found that consumers shaved $242 off their balances in the first three months of this year compared with the last quarter of 2011. The delinquency rate also fell from 0.78 percent.

The quarterly declines largely are traditional seasonal patterns as consumers pay down holiday purchases, Becker says, so there's no reason to celebrate.

If you're one of those consumers charging more -- maybe because you got a recent raise -- pay off your entire balance every month to avoid paying interest. Once you have a revolving balance, it gets harder to get your debt back to zero. (Find out how much paying just the minimum actually costs you using Bankrate's calculator.)

Are you charging more? What do you use your credit card for?

Follow me on Twitter: @JannaHerron.

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