The amount of credit card debt that had been allowed to lapse into serious delinquency – those behind 90 days or more – at the end of the third quarter was the lowest seen in more than a decade, according to the latest analysis of theindustry by TransUnion. The delinquency rate slipped to 0.83 percent, down nearly 9.8 percent from the previous quarter, and a decline of 24.6 percent from the same period last year.
TransUnion's study also found more than 8 million consumers stopped using their bank-issued general purpose credit cards in the last year. However, this wasn't just as a result of charge offs that flushed high-risk borrowers from the system, though that accounted for some of the decline. Another segment of the population has done so in an effort to curb spending. The survey found that consumers with higher incomes were just as likely as the economically disadvantaged to suspend their use of credit cards.
"The vast majority of the consumers who do not possess or have stopped using credit cards continue to have and use other forms of revolving and installment credit, and of course still need to pay for necessities," said Ezra Becker, vice president of research and consulting in TransUnion's financial services business unit.
Becker added that because many consumers have sworn off credit card debt, a number of credit and debit card issuers have been looking into ways to provide other financial services to these people.
The report noted that Nevada had the highest rate of credit card delinquency in the country at 1.28 percent, followed by Florida (1.09 percent) and Mississippi (1.06 percent). The lowest incidences of this problem were observed in the upper Midwest, as North Dakota (0.48 percent), South Dakota (0.53 percent) and Nebraska (0.56 percent) made up the three best rates seen nationwide. Nebraska, along with Alaska, saw the most significant drops in this problem during the third quarter, with declines of 17.6 and 19.2 percent, respectively.
Many consumers have also reduced the total credit card debt they owe to lenders in recent months without closing their accounts completely. They have done so by spending less and putting more money into payments.