Last week, the American Banker's Association announced that the number of credit card delinquencies had fallen to an 8-year low, with just 2.75% of all credit card payments coming more than 30 days late.
That's obviously good news for the average borrower - who by the way is carrying close to $5,000 in debt, last we heard - though there are other stats out this week that signal the delinquency rate could rise again if we're not careful.
But first, let's focus on the good news - delinquencies are in fact down across the board. That's a good job by you, America! Why exactly are late payments at an 18-year low? There are a lot of factors to consider, but perhaps the greatest is newfound transparency and education when it comes to debt.
Let's face it; over the last four years, a lot of us have found out the hard way how runaway debt can come back to haunt us. The silver lining, however, is that we're a lot more versed in what can deflate a credit score and ruin a reputation with lenders than we were just a half-decade ago. This had lead to a more rigorous interest in paying down our debt as best we can and making credit card payments - and other interest-laden bills - a priority in 2013.
Not to say we weren't aware that defaulting on a credit card payment was a credit killer pre-Great Recession - it's just now a lot more of us know just how costly a bad credit score can be in the grand scheme of things. By and large people have been more interested in austerity and frugality in general over the last few years, knowing just how bad things can get when the bottom falls out.
And yet, as Time reported last week and we're echoing here today, there's reason to believe that new consumer confidence in the economy - while strong - is pushing those credit card balances back up.
For instance, the Federal Reserve Bank of New York reported a $2 billion rise in debt in Q3; interesting considering that overall debt dropped by a full $74 billion. Odds are that debt jumped even more in Q4 when you consider holiday shopping. There are no definitive numbers out there confirming what many of us believe - that credit card debt will see a jump in Q4 of 2013 - but considering that the average American planned on spending 32% more on gifts than the previous year, according to the American Research Group, we would hardly be surprised to see even more debt in Q4 of 2012.
OK, we'll cease from speculating and wait for the numbers to come in. And who knows, maybe the new standard for credit card use will become high debt with a low delinquency rate? It's unlikely, but it's the current state of matters when it comes to credit debt in 2013.
For now, we'll keep our fingers crossed that default payments remain low in the coming months. The result could mean a stronger economy and lower interest rates, and frankly that's good news for all of us.