Credit Card Performance Improves

Americans continued to pay down their credit card debt in the second quarter, according a new report from credit tracking firm TransUnion. And although unemployment remains very high, card delinquencies are slowing as well. Both of these trends are quite good news for the fiscal health of the U.S. consumer.

Balances At An Eight-Year Low

The average balance for bank-issued credit cards declined to $4,951, a 4.1% decrease compared to the prior quarter. The balance is also 13.4% lower than Q2 2009. Last quarter marked the first with an average balance below $5,000 since the first quarter of 2002.

It's pretty clear that Americans are aggressively reducing their credit card debt. This sounds great from a fiscal responsibility standpoint. Of course, it also means that that they could be spending this money to stimulate the economy instead of paying down their debt. So while the trend is great for the long-term, it makes the recovery a little more difficult in the short-term.

Delinquencies Down Broadly

The percentage of borrowers 90 days or more delinquent on their credit cards declined to 0.92%. This is the most serious stage of delinquency, when companies generally begin assuming the account will result in a loss. Q2's rate represents a 17.1% decline compared to the first quarter, and a 21.3% year-over-year decrease. These are pretty significant improvements.

TransUnion provides this nifty map, which you can interact with here:

Transunion delinquencies Q2-2010.png

It's easy to see from this map that Nevada had the highest delinquency rate at 1.5%. Florida and Arizona followed at 1.24% and 1.11%, respectively. North Dakota, South Dakota, and DC had the lowest delinquency rates -- 0.54%, 0.55%, and 0.61%, respectively.

Here are a few additional interesting bullet points from the press release:

    • The highest state average credit card debt remained in Alaska at $7,148, followed by Tennessee at $5,654 and Hawaii at $5,594.
    • The lowest average credit card debt was found in Iowa ($3,792), followed by North Dakota ($4,097) and West Virginia ($4,104).
    • On a year-over-year basis, national credit card originations dropped almost 6.5 percent.
Presented by

Daniel Indiviglio was an associate editor at The Atlantic from 2009 through 2011. He is now the Washington, D.C.-based columnist for Reuters Breakingviews. He is also a 2011 Robert Novak Journalism Fellow through the Phillips Foundation. More

Indiviglio has also written for Forbes. Prior to becoming a journalist, he spent several years working as an investment banker and a consultant.

How to Cook Spaghetti Squash (and Why)

Cooking for yourself is one of the surest ways to eat well. Bestselling author Mark Bittman teaches James Hamblin the recipe that everyone is Googling.

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register.

blog comments powered by Disqus

Video

How to Cook Spaghetti Squash (and Why)

Cooking for yourself is one of the surest ways to eat well.

Video

Before Tinder, a Tree

Looking for your soulmate? Write a letter to the "Bridegroom's Oak" in Germany.

Video

The Health Benefits of Going Outside

People spend too much time indoors. One solution: ecotherapy.

Video

Where High Tech Meets the 1950s

Why did Green Bank, West Virginia, ban wireless signals? For science.

Video

Yes, Quidditch Is Real

How J.K. Rowling's magical sport spread from Hogwarts to college campuses

Video

Would You Live in a Treehouse?

A treehouse can be an ideal office space, vacation rental, and way of reconnecting with your youth.

More in Business

Just In