Consumers handled credit cards smartly in the first quarter of 2013
Consumers tackled their credit card debt in the first quarter of 2013 quite well. They should get special appreciation since it is the period when most people remain busy in filing income tax returns and eliminating holiday debt with the tax refunds.
Credit card default rate during the time period between January and March (2013) was less than 0.73 percent, a figure reached during the last quarter of 2012. Usually, the credit card usage increases in last 3 months of any year. People tend to heavily depend upon the cards for their holiday shopping and thus fall into debts.
As per a recent report of TransUnion, the credit card delinquency rate (for more than 90 days) dropped by around 19 percent from 0.85 percent to 0.69 percent in the last quarter of 2012.
A 2 percent increase in the Social Security payroll tax and the postponed income tax returns in 2013 didn’t prevent people for making the credit card debt payments.
Although the credit card delinquency rate has dropped in this year, yet there is nothing to be extremely happy about it since the figure is still higher than the historically low level. As per the TransUnion, the lowest delinquency rate was reached in 1990s. The rate during the July-September period in 1994 was 0.56 percent. In 2011, the default rate reached 0.60 percent in the country. This is the closest figure reached in the country recently.
Everything said and done, the credit card default rate has averaged 1.03 percent since the year 1992. This fact has been revealed by the TransUnion credit reporting agency, whose information is based upon 27 million credit records.
Ezra Becker, vice president of TransUnion is quite optimistic about the latest development in the credit industry of the country. As per her, the slight increase in delinquency is not matter of major concern since rates are still at historic lows.
Situation was really very different during the Great Recession of 2007. People were more inclined to spend money instead of repaying credit card debts. Plus, the subprime mortgage crisis forced people to give more importance towards home loans than the credit cards. When the choice was between saving the roof above their head and the credit card, maximum people had to go for the first option. Hardly any other option was left for them. So, people couldn't be blamed for spending their money towards the mortgage payments during that period.
Four years have passed since recession. The job market has not improved drastically. However, it is improving gradually. The unemployment rate reached 7.5 percent in April 2013. The national economy has been continuously generating jobs, the house price is increasing, and even the stock market has been performing well.
The slow but steady progress of the economy has given confidence to the people to spend. However, it seems that people have learned their lesson quite well. They’re not ready to repeat the same mistake again. They manage their debt payments carefully nowadays.