2010-07-08

Putting two and two together

Credit-card late payments fall to eight-year low
Late payments for bank-provided credit cards fell in the first quarter to the lowest level in eight years, the American Bankers Association reported Wednesday.

Bank-card delinquencies, reflecting card payments that are at least 30 days overdue, fell to 3.88% of all accounts in the first quarter -- the lowest rate since the first quarter of 2002 -- compared with 4.39% in the fourth quarter of 2009, according to ABA data.
Consumer Credit Plunges In May, April Revised Much Lower
The latest consumer credit number continues the decline we have seen in recent months, plunging from $2424.4 billion in April to $2415.3 billion in May, a $9.1 billion decline, or 4.5% annualized, on consensus of $2.3 billion. Yet the biggest stunner was the April revision which was whacked from +$1 billion to a revised -$14.9 billion!

In other words, there has been a $24 billion decline in consumer credit in the past two months. The biggest hit was, as usual, experienced by revolving credit accounts, which fell by a 10.5 annualized rate to $830.8 billion, from $838.2 billion in April, and just north of $910 billion a year earlier.
You can't have a bad debt if there's no debt to begin with.

Another explanation for the former story is that people are not paying their mortgage in states where there are non-recourse mortgages, but they are paying their credit card bill to keep their spending going. Once they are foreclosed on, however, they will have to find a place to rent and their spending will drop.

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