NEW YORK (AP) — For the first time in a decade, more Americans paid their credit card bills on time in the third quarter this year than in the second quarter.
The delinquency rate on bank-issued cards like those bearing MasterCard and Visa logos fell to 1.1 percent for the June-to-September period, from a rate of 1.17 percent in the prior three months, according to credit reporting agency TransUnion.
The 6 percent drop is significant not just for its size but also for its timing, since delinquency rates usually rise in the third quarter from the prior period, said Ezra Becker of TransUnion's financial services group. Taken together with the more than 11 percent decline seen between the first and second quarters, the results indicate that American consumers are getting better at handling their debt.
The 2009 third-quarter delinquency rate was basically flat with the 2008 third quarter, when 1.09 percent of card payments were 90 days or more past due. TransUnion measures credit card delinquencies at 90 days because three months is considered an indicator that the card holder will default, since it is difficult to make up that many missed payments.
TransUnion figures showed the average balance on outstanding bank cards drifted down to $5,612 from the previous quarter's $5,719, and from $5,710 in the 2008 third quarter.
One reason for consumers to pay more attention to their credit cards was worry over potential job losses, as the unemployment rate climbed toward double-digits during the third quarter. It reached 10.2 percent last month.
Becker said cutbacks in credit availability and higher interest rates also played a role in cutting the delinquency rate. While the fear of having cards shut down and anger over the moves banks have made can't be easily measured, there's anecdotal evidence that those emotions played into the improvement as well.
Becker said lower savings rates in the third quarter also contributed to pushing down delinquencies, as people shifted from socking money away in the bank to paying down their debt.
The personal savings rate in September was 3.3 percent, compared with 3 percent in August and 4 percent in July, government statistics show. In May, the rate jumped to 6.9 percent, its highest point since December 1993.
