May 10, 2010
-
News: Feds Report CC Debt Down
An increasing number of reports are indicating that credit card customers have taken control of their finances and making better choices. The most recent report by the Federal Reserve indicates that cardholders reduced credit card debt at an annual rate of 4.5 percent in March 2010. According to the report, Americans reduced credit card debt in February by 9.6 percent from $855.8 billion to $852.6 billion. The Feds caution consumers when thinking this could mean that the economy has been significantly affected since a decrease in the country's overall credit card debt could also mean an increase in defaults. Some experts believe this to be true as reports have indicated that card defaults reached record breaking numbers during first quarter.
Although Americans seem to have done a better job at managing credit card debt, the report indicated they didn't fare as well with over all debt. Consumers increased overall debt at an annual rate of one percent up from $2.44 trillion in March to $2.45 trillion. Just the month before, overall debt fell by three percent. Overall debt includes a variety of secured and unsecured credit. Unlike revolving credit which includes credit cards and charge accounts, the highest category increase was in non-revolving credit which includes auto and sport recreation vehicle loans and student loans; non-revolving credit rose 3.9 percent.
As Americans continued to deal with increasing numbers of job losses, many struggled to meet ends meet. However, the Fitch Ratings also released its report that supports the fact that credit cardholders continue to pay down debt. Although card defaults reportedly peaked during first quarter 2010, they fell by .34 percent to 10.93 percent during March. Fitch also reported that card delinquencies fell as well. Delinquencies of 30 days or more fell to 5.4 percent. Delinquencies of 60 days or more, which often go into default, fell to 4.27 percent.