American consumers appear to at last be getting to grips with the credit card payments, or it may of course just prove to have been a lucky month. During the first quarter of the year, the nation apparently performed much better than expected in repaying credit card debt and meeting payment obligation – precisely the time when post-Christmas debts usually cause chaos for millions.
According to this week’s report published by credit agency TransUnion, the number of credit card payments overdue by at least 90-days was down from the 0.85% recorded at the end of Q1 last year to 0.69% this year – a full 19% lower. The figure is also notably lower than the 0.73% recorded in the closing quarter of last year, which is the period of the year notorious for overspending and the seeking of additional financial products.
The positive report comes in spite of Social Security payroll tax hikes of 2% in January, which along with tax return delays had once again expected to see American’s falling dangerously behind on their credit card payment obligations.
Lower as it may be however, this year’s performance so far isn’t quite the best on record. Back in 1994, the same report from TransUnion recorded an all-time low late-payment rate of just 0,56%, which was followed in Q2 2011 by the second-lowest recorded rate of 0.60%.
As far as an overall average goes, the credit agency reports that since the study began in 1992, delinquency in card payments and debt has been just over the 1% mark.
When the recession first began to take hold across the US, consumers by the million began cutting back on day to day spending in order to first address pressing debts – the majority focusing first on their credit card payments. Four years later, the economy is showing signs of improvement and the job market is looking stronger, but the US is as a whole far from out of the woods yet and consumers continue to tread with caution.
Unemployment continues to hover around the 7.5% rate which is anything but ideal, though at the same time is a far cry from the October 2009 high of 10%. More jobs are being added, the housing market is growing in value and stocks are on the whole enjoying an exceptionally promising year – all factors expected to encourage consumers to gradually loosen their purse strings.
On a per-borrower basis, the average level of credit card debt a consumer carries fell from $4,962 during the first quarter of 2012 to $4,878 this year – a slide of around 1.7%. In addition, the Q1 figure was also down from the $5,122 of Q4 2012 by 4.8%.
Despite things appearing to be heading in the right direction however, TransUnion has warned that the months to come will once again bring another rise in credit card debt. According to the agency, the per-person average will spike a further 8% to take the average debt to $5,446, which would be the highest since 2009.