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.Consumer Credit Plunges In May, April Revised Much Lower
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.
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!You can't have a bad debt if there's no debt to begin with.
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.
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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