Credit card debt drops to lowest level in 8 years

[Scurrilous]

<snip>

"The amount consumers owed on their credit cards in this year's second quarter dropped to the lowest level in more than eight years as cardholders continued to pay off balances in the uncertain economy.

The average combined debt for bank-issued credit cards — like those with a MasterCard or Visa logo — fell to $4,951 in the three months ended June 30, down more than 13 percent from $5,719 in the same period a year ago, according to TransUnion.

The credit reporting agency said it was the first three-month period during which card debt fell below $5,000 since the first quarter of 2002."

<snip>

"More borrowers also made payments on time. The rate of cardholders past due by 90 days or more fell to 0.92 percent in the second quarter, from 1.17 percent last year.

That's the first time the delinquency rate has been below 1 percent since the second quarter of 2007, before the recession, said Ezra Becker, director of consulting and strategy in TransUnion's financial services unit. The rate fluctuates during the year, he said, but the improvement is more evidence that consumers are working to make sure their credit cards remain in good standing."

http://news.yahoo.com/s/ap/20100825/ap_on_bi_ge/us_credit_card_delinquencies_transunion

[Mnpaul]

1. Starve the beast

reduce it to the size where we can drown it in a bathtub

[Matariki]

3. LOL - excellent!

[Amaril]

13. +1 !!! n/t

[PBS Poll-435]

2. The beginning of a REAL recovery

Consumer spending fueled by increased personal debt is not sustainable.

[NightWatcher]

5. yep, learning we cant get by on credit cards is a START

baby steps, right?

[PBS Poll-435]

7. It is going to take a while to change the debt-fueled buying habits

But paying off debt and learning to save for major purchases rather than racking up CC bills is a good start.

[dmallind]

9. Not all credit card balances reflect real debt however

Well of course technically I suppose they do, but no more than a check accepted for payment that has not cleared really. It's a time shift of payment over the short term rather than a conversion of large amounts into multiple smaller amopunts over a long period.

I am one example of a very common user of credit cards, and my balance is routinely that high.

I just pay it off every month. The debt then is no-charge and short term, and decidedly not a drag on economic activity

Everything I can put on a credit card I do. From a fast food burger to a motorcycle. Why?

1. I do not need to carry cash and risk loss or theft (I am absent minded)
2. I get a 1% rebate on credit card spend. That's a few hundred a year
3. A high velocity of credit card use and speedy repayment maximizes my FICO score, meaning I had the flexibility to carry two mortgages in the height of the real estate downturn for a few months and get preferential rates

For everybody? Of course not. For people who have a secure income and a reasonable amount of discipline plus some basic budgeting? A good idea I think - and one very frequently adopted.

[Motown_Johnny]

4. this should be part of the discussion on the economy, along with the credit card reforms

that were recently passed



our hang over from the Shrub telling everyone to go shopping after 9-11 (what a brilliant move that was)































no, I won't use the sarcasm emote, to obvious (I hope)

[MorningGlow]

6. We owe a shit-ton more than that on our MasterCard

I'm embarrassed to admit. :blush: But we've stopped using the MC for anything but a few online purchases. I will pay this fucker off by hook or by crook. x(

[zipplewrath]

8. And when you do

you'll be surprised and the "discretionary income" you'll have. Of course after you do, I'd encourage you to continue to "pay off" the same amount, only to yourself, not to the credit card company. Ultimately ready cash is very powerful.

After I paid off my first car, I kept "paying" myself into an account. Yeah, I skipped the occasional month, even had to "dip into" the account a couple of times when something big broke. But when the second car need to be bought, I had a large amount, and only had to borrow a fraction of the cost. Repeated it after the second car. By the third, I had enough to pay cash. You do piss off the car dealer though when they can't "compete" with your check book with their loan department.

[nadinbrzezinski]

12. Ah do I know that

we are not pulling the trigger on that, since hubby's job might not be safe... but when we finally decide to pull the trigger on getting a new vehicle... we will piss the dealer off.

How do you plan to finance this?

CASH?

I save, every month. Why a few emergencies have been fully covered.

[MorningGlow]

15. Too true

Just took out a home equity loan to pay off "the other" debt--a personal loan that was used as debt consolidation (when I say "shit-ton" of debt, I mean it). That was an ugly almost-$700-a-month payment (I had been rounding it up to $700 to get rid of it faster before we did the home equity loan). The home equity loan monthly payment is $150. I just bought a used car because my Jeep's transmission shit the bed. That monthly payment is around $200. So we're going to be clearing $350 a month. I can't decide whether to throw that at the MasterCard or squirrel it away. But I'm ecstatic that I'm going to at least have that option!

[Dawson Leery]

10. Credit Cards should only be used for major purchases

that you can afford, such as vacations and computers, etc.
Otherwise, pay cash or use a debit card.

[Skink]

11. Credit lines cut off, nothing to do but pay.

so of course we owe less. If they kept staking us we'd owe more.

[Name removed]

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