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Breaking the Credit Habit: Not as Impossible As They Said it Would Be

Who said we are all credit mongers? It seems when it comes to tightening the proverbial belt, we're not hopeless.
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Did the economic toil of 2008 push cash-strapped consumers to wildly apply for credit cards and default on their existing debt? Not remotely, according to a bit of research:

  1. National credit card debt per credit borrower in the US was $1,717 in the second quarter of 2008 - up 2.63 percent from the first quarter of the year 8.6 percent from the second quarter of 2007. [Source: TransUnion.]

But the delinquency rate* - contrary to what you might expect - actually declined from the first quarter to the second quarter this year. This shows that issues of credit default may be localized and tied to the mortgage industry.

  • Early third quarter activity (June '08) showed a decline in the number of credit card applications. [Source: NetBanker.]

    • The number of people "shopping" for credit cards dropped by 2% over the prior month - okay, we'll take it. But check this out: that number (about 12.2 million consumers) represents a whopping 39% drop from the same period last year. From the same report, we can see that deposit activity is up and people seem to be more interested in saving. That's great news.

    So, who said we are all credit mongers? It seems when it comes to tightening the proverbial belt, we're not hopeless.

    *Delinquency incidence rate is the ratio of borrowers that are 90 or more days past due on their payment. The rate in the second quarter of this year was 1.04 percent, which is a 12.6 percent decline from the first quarter, but still higher than the 0.91 percent rate in the second quarter of 2007.

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