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Credit card debt, be gone!

By Janna Herron ·
Thursday, September 15, 2011
Posted: 4 pm ET

Chase credit cardholders behaved better than Capital One's last month. But overall, Americans continue to treat their plastic with more respect.

The "Viking" company reported Thursday that the percentage of customers who paid their credit card bills at least 30 days late ticked up to 3.43 percent last month from 3.37 percent.

The rate at which Capital One wrote off accounts as uncollectible also rose to 4.1 percent from 3.77 percent in July. Still, the pace remains near the lowest levels since the recession began, MarketWatch said.

Over at Chase, there was better news. Only 2.48 percent of its credit cardholders were 30 days or more behind on their payments, down from 2.52 percent in July. The pace of charge-offs at the New York bank also slowed in August to 4.67 percent from 4.78 percent, higher than at Capital One but the lowest level for Chase since September 2008, according to The Associated Press.

On Monday, Discover delivered similar news about its cardholders. The rate of credit card defaults reached a new low in August. The percentage of payments that were late by 30 days or more also fell in August to the lowest point since the recession began.

Bank of America also joined the chorus with Discover and Chase (just in time to make this blog). The bank reported that credit card defaults and late payments improved last month. If you recall, Bank of America, along with Citi, posted surprise increases in default rates in July. Citi is expected to report its August results sometime Thursday.

What does all this mean? Well, Americans are choosing to shore up their finances rather than buying shiny new things, a trend that has lasted since the Great Recession took hold.

Call it "the Great Debt Reduction."

They are even more interested in deleveraging than in saving. An online poll last month from the National Foundation for Credit Counseling showed that almost nine out of 10 respondents were committed to paying down debt over saving money.

If you're one of the millions getting your credit card debt under control, here are few quick tips to help you get there:

  1. Start with the balance with highest interest rate, so you waste less of your hard-earned money on interest. If you need consistent motivation, tackle the lowest balance first to give you a boost.
  2. Carve out a little extra money each month to put toward your debt reduction plan. Skip the latte or pare down to basic cable, for example.
  3. Once you get you balances down to zero, keep using your credit cards to lift your credit score. But make sure to pay off your balance each month and on time.

How did you pay off your credit card debt? Tell me your story.

Follow me on Twitter: @JannaHerron

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