The American Bankers Association announced yesterday that there were fewer delinquent credit card payments (late more than 30 days) have reached an eight-year low. Only 3.88% of credit card payments were overdue in the first quarter of 2010, compared to 4.39% in the last quarter of 2009.
Fewer home equity loans and lines of credit (HELOC) were also 30 days overdue. But marine and RV loans saw increased delinquencies, probably because they’re mainly for entertainment purposes and people are paying off their “main” debts first. Although I’m not sure why they would be a lower priority than paying off credit cards. I can see folks paying their mortgage and auto loans on time — keeping my home and car are MY priorities!
So what does this all mean? While encouraging because there are fewer than average delinquencies, it’s still tough out there, thanks to a national unemployment rate hovering around 9.5%. But I think the lower numbers mean more people are taking charge of their credit card debt — they’re not happy with it hanging over their heads. In high times, paying the minimum payment is acceptable — you’ll have more money in your pocket, right!? But once you lose your job and the financial walls start crumbling, that $10,000 balance looms over you like a black cloud.
It’s the same idea behind Americans saving more money lately — now that the other shoe has dropped, they realize they NEED that savings cushion to pay their bills and survive in this economy. Frivolous spending, for now, has fallen by the wayside. More and more people are becoming fiscally responsible.
Will it last? That’s doubtful. When the economy starts growing unchecked again, I’m sure all of these improved personal finances habits will slowly disappear until the next catastrophe hits. It’s just human nature.