Delinquency rates fall on consumer debt

By Helen Chernikoff

NEW YORK (BestGrowthStock) – Consumers in the United States are taking on less debt than they did before the recession even though fewer of them are falling behind on their loans.

Delinquency rates on mortgages, home equity loans and credit cards fell in May for the fourth straight month, according to data that Equifax Inc (EFX.N: ), one of the largest U.S. credit bureaus, provided exclusively to Reuters.

The data is based on Equifax’ 200 million-plus files of U.S. consumers using credit.

Student loan delinquency, however, continues to rise. In May, 11.4 percent of students were at least 60 days late on their loans, up 1.6 percent from April and 4.7 percent from last year.

But student loans are the exception.

Delinquency on bank-issued credit cards fell to 1.8 percent, down 7 percent from April and 22 percent from a year earlier.

As consumers keep current on credit card debt, they are also using less of it and saving more.

Outstanding balances on bank-issued credit cards have fallen 13.2 percent to $726 million in May. That is lower than they were in May 2007.

In April, the savings rate rose to 3.6 percent from 3.1 percent in March. [nN27266059]

“Consumers have had a love affair with credit cards, and that seems to have ended,” said Dann Adams, president of Equifax’ U.S. Consumer Information Solutions.

Lenders are being more cautious as well. Banks today issue an average of 2 million credit cards per month, down by about two-thirds from 2006 and 2007, Adams said.

The credit card numbers match the general trend.

Total U.S. consumer balances have fallen by $690.5 billion, or 6 percent, from their peak of $11.5 trillion in October 2008. Balances have not been this low since August 2007.

“But until consumer confidence increases and unemployment decreases, it’s very difficult for consumers to go out on the edge and begin borrowing,” Adams said.

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(Reporting by Helen Chernikoff; Editing by Derek Caney)

Delinquency rates fall on consumer debt