The average amount of credit card debt Americans are carrying grew by 4.9 percent during the third quarter of 2012, but borrowers are making fewer timely payments than in previous quarters according to TransUnion, one of the nation’s largest credit reporting services. The average balance carried on American credit cards now stands at $4,996, but credit card payments over 90 days past due are up to 0.75 percent.
While the higher balances could be due to seasonal factors, it is also possible consumers are showing a bit more economic confidence as jobs continue to be added. Banks have also loosened credit requirements somewhat, offering more cards to those with lower credit scores. New card openings rose by 3.1 percent in the second quarter of 2012, and more than 25 percent of those new cards were issued to holders with credit scores below 700.
Customers with high credit scores have reined in their spending somewhat, leaving the customer base for credit cards heavily weighted in favor of those who have less-than-perfect credit. However, even among the subprime credit group, lenders can be choosy about the customers to whom they offer the best rates. The borrowers with the best credit ratings and the most responsible handling of credit will likely continue to get the best interest rates.
Perhaps surprisingly, this group can include those who have filed for bankruptcy. While bankruptcy will definitely hurt an individual’s credit score for some time, in many cases bankruptcy can give a debtor a fresh start, providing a quicker route to taking control of bills than to struggle with impossible payments. A bankruptcy attorney can explain the benefits and disadvantages of bankruptcy filing.
Source: USA Today, “Average credit card debt per borrower up in 3Q,” Nov. 18, 2012