Why Reduced Credit Card Delinquency Is Bad News

New data from the American Bankers Association shows that the rates of late payments for most categories of consumer loans are creeping up. In the aggregate, nine of 11 different loan categories showed increases in nonpayment rates. One significant outlier: credit cards, where the rate of 30-day-late or delinquent payments dropped a small amount, from 3.4 percent to 3.2 percent. Experts say that’s very bad news. Want to know why? “One new trend is that people are paying their credit card payments on time each month, even if that means missing their mortgage payment,” Mechel Glass, director of education for credit counseling organization CredAbility, says via email. “Some people utilize those credit cards to pay daily expenses that should fit within their budget, but it doesn’t due to a variety of reasons such as reduce income or underemployment.”

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