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Credit card delinquencies fall despite economic uncertainty

Woman sitting in a cafe, holding her credit card in front of her open laptopImage: Woman sitting in a cafe, holding her credit card in front of her open laptop
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Delinquencies on credit cards provided by banks fell in the first quarter of 2019, a recent report from the American Bankers Association shows.

Delinquencies on credit cards issued by banks fell 18 basis points in the first three months of 2019 to 3.04% — compared with 3.22% the previous quarter. This remains well under the average delinquency rate of 4.33% before the last recession.

This news is a reversal of previous ABA data that showed delinquencies for credit cards provided by banks — accounts with payments that are past due by 30 days or more — were on the rise. In the final three months of 2018, delinquencies climbed 17 basis points to 3.22%.

The drop in bank credit card delinquencies is a positive shift amid other signals of economic uncertainty. Read on to learn more.

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Why are falling credit card delinquencies good news?

The recent report on falling bank credit card delinquencies is welcome news given recent mixed signals about the U.S. economy.

In testimony before Congress this week, Federal Reserve Chairman Jerome Powell said although the Federal Reserve expects unemployment to remain low and inflation to increase gradually, global economic uncertainty and ongoing trade disputes could slow the U.S. economy.

What’s more, the U.S. Treasury yield curve — a measure of the performance of short- and long-term Treasury notes — is now inverted. According to a report in the Wall Street Journal, an inverted yield curve has historically been an indicator that a recession was looming.

What can you do to work on your credit card debt?

If you have credit card debt, it’s good to know how to keep your balances from getting to the point of delinquency. Here are some tips for staying on top of credit card debt.

  • Pay your credit card bills on time — and pay more than the minimum if you can. By doing this, you can avoid late-payment fees and make more progress toward paying down your debt. Keeping your payment history positive and reducing your credit utilization (your credit card balances divided by your credit card limits) can also help strengthen your credit profile.
  • Put together a debt-repayment planWhether that means paying down your highest-balance debt first or your highest-interest debt first, making a plan to tackle your debt and sticking with it can help you make progress.
  • If you have credit card debt across several accounts, you might want to think about a personal loan for debt consolidation. Paying off one bill every month instead of several can help you track your debt more easily.

About the author: Paris Ward is a content strategist at Credit Karma, providing readers with the latest news that will aid their financial progress. She has more than a decade of experience as a writer and editor and holds a bachelor’s… Read more.