NEW YORK - The credit card delinquency rate, or rate of payments 90 days or more past due, fell to 0.60 percent in the second quarter, down from 0.92 percent a year earlier. That’s the lowest rate since 1994, according to TransUnion, the credit-reporting agency.
Delinquencies were expected to drop, but the improvement in that April to June period was faster than forecast.
And the improved payment habits came despite increased use of credit cards, which is shown in quarterly data reported by banks that issue Visa and MasterCard-branded cards, as well as data from American Express Co. and Discover Financial Corp.
The average combined total debt for all major credit cards increased by $20 from the first three months of the year, to $4,699 per borrower. Even so, that amount was down more than 5 percent from the $4,951 average in the second quarter of 2010, and was 16 percent lower than the peak average debt of $5,575 in the first quarter of 2009.
The overall improvements stem from a variety of factors, said Chet Wiermanski, global chief scientist for TransUnion’s financial services business.
“Not only do we have consumers that are using their debt more responsibly and taking out less debt, they’ve also cut back on the number of the cards they carry,’’ he said.
Also contributing is the fact that banks have tightened their standards for approving card applications.
After writing off record levels of uncollectible debt in recent years, most banks won’t issue cards to applicants with low credit scores. They have also cut back credit limits on existing cards, making it harder for individuals to run up huge balances. And Wiermanski noted that debit card use continues to rise, which reflects more cautious spending by consumers.
TransUnion expects the delinquency rate to continue drifting down this year, but did not offer a specific projection.
“It’s hard to forecast where this is going when you’ve reached a historical low,’’ Wiermanski said, “because you’re in uncharted waters.’’
