Credit Card Debt Declining at Record Level
Data released on Friday by the Federal Reserve shows that the consumer debt is declining at a record pace.
The Federal Reserve Consumer Credit report reveals that credit card debt fell in November for the 14th consecutive month. Revolving credit, the majority of which is credit card debt, decreased at an annual rate of 18.5% in November. This is the largest percentage drop ever recorded. It has fallen over $100 billion since October of 2008, from $976.1 billion to $874.0 billion.
Another report, The Credit Card Index from Fitch Ratings, showed that delinquent balances on U.S. credit cards reached record levels. The 60+ day delinquency rate reached an all-time high of 4.54% for the December 2009 index, which is based on performance data through November month end. This surpassed the previous high of 4.45% set in June 2009.
These credit records show the continuation of the lending crisis. Consumers are still having problems paying off what they owe on their credit card balances. Issuers are still charging off accounts. Banks are working to reduce their loss rate. They are reluctant to make new loans and have tightened lending standards. Meanwhile, consumers are cutting back on using credit cards and reducing their credit card debt.
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