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Home / Credit / More Good News On The Credit Front

 

Just a short time ago, I published a piece entitled ”A Bright Spot In Our Credit Crazed Country.” I wrote the post with a bit of pessimism, alright a lot of pessimism, about the state of credit use in the United States. My pessimism was a result of the rising amount of credit card debt Americans are taking on just a few years after the Great Recession. While I still hold many doubts and feelings of foreboding over the increase in debt, there is a new report out showing yet another bright spot within the credit arena.

Fewer Delinquencies

According to statistics released by the American Bankers Association (ABA), the number of borrowers who are more than 30 days late on their payments for a bank-issued credit card dropped to 2.75 percent. That is the lowest rate over the past eighteen years. A few short years ago, the rate was at five percent. The same report goes on to say that the delinquency rate on home improvement loans, home equity loans and equity lines of credit also dropped. These stats cover the last quarter of 2012, the latest quarter stats are available for. The news is not all rosy, though. Delinquencies on autos and mobile homes rose slightly over the same period.

While fewer delinquencies on credit card debt is a fair sign of improving economic health, it is not as strong an indicator as the rates on autos and mobile homes. Is it possible people are barely able to afford the credit card payments, but have to miss payments on their vehicles or homes? At least one economist doesn’t think so. James Chessen, the ABA’s chief economist, said:

”While this conservative approach to credit may slow economic growth in the short-term, it portends stronger, more consistent growth in the future. The sharp decline in delinquencies reinforces the notion that the economic recovery has become more self-sustaining and is on a path to increased growth.”

I don’t agree, but, then again, I am only the chief economist of my household.

 

About the author: Jerry Coffey

 

Jerry Coffey spent many years in a debt-riddled gray area somewhere between broke and desperately broke. His seemingly endless need for more and more cash led him to payday loans, repossessions, bankruptcy, and depression. After years of the same financial style, he heard a piece of advice that inspired him to find a way to change. The advice: ''The very definition of a fool is someone who continues to do the same things, but expects different results.'' This led him to a much more frugal lifestyle that sees all of his bills paid on time and a growing savings account. Even the seed of a retirement account has begun to sprout.

 

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