If you skip a credit card payment — a.k.a you just don’t pay your bill for a month — you’re considered delinquent.
Today, TransUnion reported that the 90-day delinquency rate has fallen by about half since 2007. Antoni Guitart is their director of research and consulting.
He says credit card delinquencies are trending steadily downward.
“They’re even considerably lower than they were before the recession ever hit," he explains. "So, it’s been quite an improvement.”
Of course, banks ding us with late fees if we’re delinquent. So, if more of us are paying on time, is that bad news for fee-hungry institutions?
Not according to Curt Long, chief economist at the National Association of Federal Credit Unions: “We think this is a positive trend for credit unions.”
He says banks and credit unions still make money if we carry a balance on our credit cards. Even if we don’t, they get a swipe fee every time we charge something.
Long says delinquencies can turn into charge-offs — loans that are never paid back.
“Thankfully we’ve seen charge-offs decline as well,"Long says. "Fewer of those loans are going bad.”
The fall in delinquencies is even leading banks to give credit cards to people with lower credit scores.
Lawrence J. White teaches economics at the NYU Stern School of Business. He says it makes sense for banks to loosen up credit right now for the less-than-perfect consumer: “Because the economy is better, he or she is more likely to stay employed and be in a position where he or she can repay.”
And White says consumers have learned not to live beyond their means; they don’t want to slide back to where they were during the Great Recession, and are using credit more wisely.