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They Just Won't Quit: Consumers Cut Debt Again

Many consumers have made significant efforts to get their finances back on track in the past few years, and that trend continued into the first quarter of the year, as average balances on credit cards, and rates of late payments on them, both declined once again.

The national delinquency rate on credit card accounts — defined as accounts 90 days or more behind on payments – slipped to 0.69 percent through the end of March, down from 0.73 percent in the same period the year before and 0.85 percent from just three months prior, according to the latest statistics from the credit monitoring bureau TransUnion. Meanwhile, the average amount of debt held by all consumers on these accounts slipped to $4,878, down 4.75 percent on a quarterly basis (from $5,122) and 1.69 percent annually (from $4,962).

“We traditionally see credit card delinquencies and balances decline during the first three months of the year as many people pay down their holiday shopping balances or use their tax refunds to pay off their debts,” said Ezra Becker, vice president of research and consulting in TransUnion’s financial services business unit. “In addition to the seasonal quarter-over-quarter drop, the year-over year improvement in credit card delinquencies is indicative of how consumers continue to value their credit card relationships.”

The states with the highest average credit card balances were Alaska, Colorado, North Carolina and Connecticut, ranging from $5,498 to $6,789 per borrower, the report said. Meanwhile, Iowa, at $3,810, led the nation in lowest balances, while North and South Dakota and Wisconsin rounded out the top four.

South and North Dakota also finished tied for first, with Montana, in national lows for delinquency rates at just 0.43 percent, the report said. Minnesota was close behind at 0.44 percent. Meanwhile, Mississippi came in with the highest such rate, at 1.11 percent, but was the only one in the country with late payments above 1 percent. Alabama (0.94 percent), Arkansas (0.89 percent) and Georgia (0.87 percent) were also among the highest nationwide.

Many consumers may be concentrating on shedding debts and also keeping them down going forward as a result of financial hardships suffered during and following the recession. This may be particularly true of younger adults who were discouraged from getting involved in credit card use in the first place because of these difficulties.

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