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Late payments on credit card debt approaches record low

A new study by TransUnion, a credit rating company, revealed that the U.S. credit card delinquency rate in the second quarter of this year was within one hundreth of a percent of tying the all-time record low of 0.56 percent. "Delinquent" in this study was defined as being at least 90 days overdue with a payment.

The record was set back in 1994 -- and now, nearly two decades later, the delinquency rate is 0.57 percent. For comparison, the average delinquency rate in second quarters over the past 13 years is 1.07 percent. The 2013 second quarter rating also reflects a marked improvement over the first quarter of the year, which saw a delinquency rate of 0.63 percent.

So what is driving this near record breaking behavior by U.S. citizens? Well there are a couple of things at work. First is the obvious: in the wake of the global recession of 2008, people have reined in their spending. Most people have tightened their budget and are doing everything they can to stay on track with their debt.

However, the other may not be so obvious: people are still significantly in debt despite adopting a more consistent paying strategy. According to TransUnion, the average amount of debt a person has carried year-over-year has barely changed. In the second quarter of 2012, it was $4,971; in this quarter, it was $4,965. So people are still in debt; they're just doing what they have to do to limit their problems.

While this news is a welcome improvement, there will always be people who are in need of bankruptcy protection so that they can make ends meet. Credit card debt is a major contributor to financial problems; and those people who are struggling with such debt need to consider their legal options.

Source: Los Angeles Times, "Credit card delinquency rate falls to lowest level in 19 years," Walter Hamilton, Aug. 13, 2013

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