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Late payments dip to 18-year low

By Janna Herron ·
Tuesday, April 2, 2013
Posted: 4 pm ET

The percentage of Americans behind on their credit card payments fell to the lowest level in nearly two decades in the final three months of 2012, according to a report from a banking trade group.

The American Bankers Association said Tuesday that bank card delinquencies decreased to 2.47 percent of all accounts in the fourth quarter from 2.75 percent in the third quarter. The last time delinquencies -- measured as 30 days or more overdue -- were that low for credit cards was the third quarter of 1994.

The 15-year average for credit card delinquencies is 3.87 percent.

"It's obvious that Americans aren't using their credit cards very much or they are paying their balances off very fast," says Chris Christopher, senior principal economist at IHS Global Insight. "Wages aren't that great, job prospects are still weak. Those things put a damper on credit card usage."

He also noted that credit card usage could be affected by the rise in student loan debt and delinquencies, which the ABA does not track. Recent data from the New York Federal Reserve Bank showed that 1 in 6 student borrowers were at least 90 days behind on their loan payments. More than 2 out of 5 saw their balances increase or remain unchanged.

The New York Fed also found a strong correlation between delinquent student loan borrowers and delinquent borrowers of other types of debt.

The ABA tracks delinquencies for 11 types of loans. In the fourth quarter, six categories of loans saw average delinquencies decline, while delinquency rates in four categories increased. RV loan delinquencies stayed steady during the period.

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