Research and Statistics

Card delinquency hits 15-year low


It’s another sign of U.S. consumers’ improving finances

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In another sign of improving finances  for American consumers, credit card delinquency rates dropped to their lowest level in 15 years, according to the New York Federal Reserve’s latest report.

The percentage of credit card balances that are delinquent 90 days or more registered at 7.08 percent for 2016’s third quarter, which is the lowest rate since late 2001. It’s also the fifth consecutive quarterly drop, steadily sinking the rate from the 8.39 percent seen just 16 months ago.

See related: How late payments get reported to credit bureaus

As the recession took hold in 2008, card delinquency rates hovered in the 9 to 10 percent range. But 2009 saw the rate skyrocket every quarter until it reached a high of 13.74 percent in mid-2010.

In the 25 quarterly reports since the peak, the rate has dropped all but four times, to where the latest reading almost brings the percentage down to half the peak rate.

Among the four major types of consumer debt – credit card, mortgage, auto loan and student loan – delinquency rates had historically been highest for credit cards, indicating that when consumers hit tough financial times, card balances are typically the first debt they stop paying. But in late 2012, delinquencies for student loans surpassed those for card debt, and have since remained the highest delinquency rate.

The Federal Reserve Bank of New York’s Quarterly Report on Household Debt and Credit draws its findings from Equifax credit-report data on a nationally representative 5 percent random sample of 44 million individuals who have a social security number and a credit report (usually age 19 and over). The latest quarterly report was released Nov. 30, 2016.

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