Credit Card Payments Get More Reliable

Fewer Americans were delinquent paying their credit card bills last month, a recent report says. It’s a trend credit unions are noting.


Amid the flurry of the this week’s news cycle so far is a report that the national credit card delinquency rate declined in the second quarter to the lowest point in 17 years.

The national credit card delinquency rate – payments 90 days or more past due –was just 0.6% in the second quarter of this year, which is down from 0.92% a year ago, according to a report from TransUnion. It’s the lowest rate since 1994.

The Chicago-based credit reporting agency attributed the drop to several factors including consumers using their credit cards more responsibility, lending institutions writing off more delinquent loans as uncollectable and lenders more closely scrutinizing consumer applications.

And credit unions have been noting that steady decline in their second quarter financial statements, Callahan & Associates reported earlier this month with financial reports from 6,200 credit unions. The preliminary data showed credit unions’ credit card delinquencies fell to 1.2% in the second quarter of 2011 from roughly 1.75% a year prior.

For credit unions, which traditionally don’t charge as much as banks in late fees, a decline in credit card late payments would have a different financial impact, likely not as significant to the bottom line.

Card holders are also using their cards more frequently and carry about 5% less debt than the same quarter a year prior, according to TransUnion, which expected the credit card delinquency rate to continue on a downward decline for the rest of the year. Meanwhile, credit card limits rose by $60 billion, or 2.1%, in the second quarter, according to the Federal Reserve Bank of New York.