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Fewer Americans behind on credit cards

By Jeanine Skowronski ·
Tuesday, August 26, 2014
Posted: 3 pm ET

Good news: We're all getting better at paying our credit card bills.

New data from TransUnion puts the national credit card delinquency rate at its lowest level in at least seven years, dropping from 1.27 percent in the second quarter of 2013 to 1.16 percent in second quarter of 2014. The rate is based on the ratio of borrowers 90 days or more delinquent on their general purpose credit cards.

"This is a long-running trend," says Toni Guitart, director of research and consulting in TransUnion's financial services business unit. He attributes the decrease to a clearing out of charge-offs and more stringent credit standards post-Recession.

Plus, "the economy is improving," he says. "Improvement in the labor market ... is ultimately correlated with credit performance."

More good news: The average credit card debt per borrower has remained relatively unchanged in the last year, only increasing slightly from $5,226 in the second quarter of 2013 to $5,234 in the second quarter of 2014.

"So far you don't see consumers going back aggressively into borrowing," Guitart says.

TransUnion expects delinquencies will stabilize or continue to decline in coming quarters as long as the economy continues to improve. However, there is another factor that could jeopardize the numbers.

As part of another trend, the credit bureau found the non-prime population (consumers with a VantageScore 2.0 lower than 700) represents a larger portion of all new credit card loans at 31.2 percent in the first quarter of 2014, up from 27.3 percent in the same period last year.

"Lenders appear to be a little more willing to lend to people with less than perfect credit histories," Guitart says. "They might incur a little bit higher delinquency rate. That's a driver that could change things in the opposite way."

Are you having an easier time managing your credit card bills? Let us know in the comments below.

Follow me on Twitter: @JeanineSko.

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Mary Chris Vanderveer
February 24, 2015 at 8:19 am

are you a part of charging me under Horizon credit card. I signed up for a new card?

October 13, 2014 at 8:48 pm

Richard is correct, If counting items (like people, cats buildigs ) the term m is fewer. If dealing with volumes (quarts, barrels , etc, the term is less.

August 27, 2014 at 12:21 pm

"Fewer" Americans not "less" Americans. Please!