The latest American Bankers Association report shows that the financial health of the nation is improving, as credit card delinquencies reach a two-decade low. Credit card delinquencies are defined as accounts that are 30 days or more overdue on their payments. In 2009 after the financial crisis, credit card delinquencies set a record high of 5.01 percent. Currently, the delinquency rate stands at 2.47 percent. With more money management information available and a stronger economy, Americans are improving at paying their credit card bills on time.
Could New Credit Scores Help Americans?
By exercising better money management, Americans are not only paying off their credit debt, but also improving their credit scores in the process. A stronger credit score means lower interest rates and more borrowing opportunities in the future. Furthermore, it makes it easier for consumers to meet financial obligations.
While credit card payments are being made on time, other debts such as student loans are suffering from delinquent payments. According to the New York Federal Reserve Board, approximately 11.7 percent of student loans are over 90 days delinquent on their payments. This is up from the 8.69 percent at the first quarter of 2012. Delinquencies on boat, home, and automobile homes have risen as well.
After the financial crisis of 2008, consumers have increasingly paid more attention to their money management and exercised financial caution. This has attributed to the two-decade low in credit card delinquency rates. As consumers are working to eliminate their debt, they’re also trying to build secure financial bases for retirement. They’re also more cautious when they apply for credit cards or loans to avoid future problems. All of these elements have culminated in timely payments and lower credit card delinquency rates.