Credit Card Debt Down, Late Payments Up

The economic downturn of recent years has led many Americans to rely on their credit cards more often to pay for every day expenses. But, an increase in the use of credit cards can lead to other financial issues for an individual or family. Credit card debt is often cited as a reason by many for filing for bankruptcy. Credit card debt may be discharged in bankruptcy.

The holiday season can also affect credit card debt. Many individuals are buying things that are not typically purchased in other times of the year, including additional food and gifts. The holiday season saw the rate of payments made at least 90 days overdue rise from the figures from 2011 by about 9 percent.

The rate of delinquency payments is not likely to decrease as quickly as most years though. Often, card holders get caught up on payments in the early months of the year because they are not spending as much and can put more towards bills. But this year, the federal government may have hindered some Americans' ability to get back on track as quickly. The lapse of the Social Security payroll tax reduction at the end of last year, combined with a tax refund that will probably be coming later because of the late changes in the tax code, may drive these late payment rates up in the first quarter of this year.

A silver lining is that the average credit card debt per borrower is declining. This is a sign that most consumers are more careful with their credit than in the past. Also, even though there has been an increase in late payments, the increase is coming from historically low levels.

Source: The Sacramento Bee, "Average credit card debt falls, late payments rise," Alex Veiga, Feb. 19, 2013

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