Report: Late Payments on Credit Cards Jump, Debt Falls in Q3

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Americans will be spending a large portion of their free time this month at shopping malls, electronic outlets and department stores. On top of being bombarded with advertisements and sale posters by retailers, they will be accompanied by a list, bags and credit cards – also temporarily chucking fiscal responsibility out the window.

Prior to the official beginning of the holiday shopping season, credit reporting agency TransUnion published a report on credit card debt in the third quarter of the year late last month. Its figures came with mixed results.

According to the report, more consumers fell behind on their credit card payments. Between the months of July and September, the rate of credit card payments overdue by at least 90 days increased from 1.27 percent in the previous quarter to 1.36 percent. The figure is down from 1.5 percent from the same time a year ago. A positive number to show consumers are tackling their debt hurdles.

“The credit card delinquency rate typically rises in the third quarter, partly because of back-to-school spending,” said Toni Guitart, director of research and consulting at TransUnion’s financial services business unit, in an interview with the Associated Press.

Although the delinquency rate slightly jumped, overall credit card balances have been shrinking over the past year. In the third quarter, credit card debt per borrower declined by 1.3 percent to $5,235. This is due in part to minimal job growth and small wage escalation. The Federal Reserve noted that Americans cut back on their credit card usage in September for the fourth straight month.

“While consumer credit card delinquencies increased on a quarterly basis, they continued an overall trend of strong performance as evidenced by the yearly decline,” said Ezra Becker, vice president of research and consulting in TransUnion’s financial services business unit, in a statement. “Our data show that consumers continue to deleverage, with balances dropping in the past year and remaining near historical lows. It appears that, with continued strong credit performance and relatively low debt levels, consumers may be in a strong position to receive more attractive, feature-rich offers from credit card lenders.”

In total, credit card debt dropped $2.1 billion. However, consumers increased their borrowing by $13.7 billion to a grand total of more than $3 trillion, mostly to pay for automobile and student loans.

The number of households with credit cards is quite substantial. An infographic found that 72 percent of Americans have at least one credit card, while one in five has four or more cards – more than two-thirds (68 percent) of college seniors have at least one credit card. The average debt per adult is $8,220.

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The statistics are also quite telling. More than one-third (39 percent) of Americans carry debt from month-to-month and just about half had some sort of credit card balance. Most of the debt accrued by low- and middle-income households is due to unemployment expenses (86 percent of) and college related expenditures (71 percent).

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