Fewer Americans are falling behind on their credit card payments in what could be a good sign for consumers and the economy. Reuters compiled a list of multiple lenders including Bank of America®, Citigroup and American Express, to look at how delinquency rates have changed over the past year.
What the Figures Show
The newest numbers regarding delinquencies provide a small glimmer of hope for an economy that needs it. Late credit card payments are reportedly at their lowest this year which could mean Americans are not struggling to pay off their debts as much and are doing a better job of budgeting their money.
Lending Institution September 2010 Delinquency Rate October 2010 Delinquency Rate Percent Change
Bank of America 5.71% 5.60% - .11%
JPMorgan Chase & Co 3.81% 3.81% 0%
Citigroup 4.74% 4.93% -.19%
Discover 4.41% 4.34% -.07%
Capital One Financial Corp 4.53% 4.45% -.08%
American Express 2.5% 2.3% -.2%
All the lenders saw a drop in delinquencies. American Express, one of the largest credit-card lenders in the U.S., reported the lowest level of any major U.S. lender at 2.3%.
According to Reuters, “The steady decline this year at the top U.S. credit-card lenders signals that American consumers have recovered from the worst of the financial crisis,” but the nation is not in the clear quite yet. Consumers might be starting to get back on track with their payments, but the second half of the year could bring a hike in delinquent payments due to seasonal spending and dwindling tax refunds.
Figures may show that consumers are not having as much difficulty paying off their credit card bills, but the problem is that the unemployment rate is still high and the economic recovery is not moving as quickly as it should. The holiday season holds promise for a boost in spending but this is not enough to have a larger impact on the low employment rates and struggling economy. The Federal Reserve is currently trying to stimulate the economy with their controversial quantitative easing plan, but only time will tell what will really get the economy going again.
How has the recession changed your spending habits? Let us know in the comments.