Credit card delinquencies tumbled in the second quarter as individuals' average balances hit an eight-year low and nonpayments dropped at the fastest pace since the end of 2007, according to TransUnion LLC.
Wednesday's announcement came as Americans have cut credit card use for 21 straight months through June, according to the Federal Reserve. Weak job growth and a slowing economy have turned spenders into savers, putting more pressure on the sluggish economic recovery.
Credit card accounts 90 days or more past due totaled 0.92%, down 21% from a year earlier and 17% from the first quarter. The figure is projected to stay below 1% the rest of the year, TransUnion said.
Nevada, where second-quarter credit card delinquencies were highest, is also expected to have the highest delinquency rate at yearend — about 1.6% — and North Dakota, which had the lowest rate in the quarter, is projected to have the lowest at yearend, 0.56%. Just one state, Alaska, had a sequential increase in delinquencies; it also had the highest average credit card debt, at $7,148.
Meanwhile, the national average for individuals dropped for a fifth straight quarter. The $4,951 average was the first time the measure has dropped below $5,000 since early 2002; it is down 13% on the year and 4.1% from the first quarter.
TransUnion also said Wednesday that credit card originations had declined nearly 6.5% from a year earlier; 12 states showed increases. The top three states for card issuance were Maine, Ohio and Washington. The steepest declines were in Arizona, Georgia and Michigan, which have been hard hit by the housing crisis and recession.