A survey from the Federal Reserve Board has highlighted that though the credit card debt showed a downward trend in the month of March, the overall customer credit saw an upward trend.
The report went on to say that after a 3% drop in the second month of the year, the consumer credit increased and the rate of 1% per annum in the month of March. Consumer credit, which stood at $2.44 trillion, has now gone up to $2.45 trillion.
3.9% gain was shown by non revolving credit which is one of the main reasons for the increase in consumer credit. Loans that are given out for cars and boats and even student loans come under the category of non revolving credit.
On the positive side, the revolving credit has been showing a downward trend. Starting from the year 2009, there has been a reduction of 4.5% every year starting from the month of March. Credit card debts form the largest chunk of non revolving credit. The reduction in this sector clearly implies that consumers are keen on reducing the debts they owe to their banks on their credit cards. Many banks also reported a fall in their defaulter's rate which has given them a reason to smile. Considering this to a positive trend signifying the improvement in the economy some banks have now increased credit card offers in an effort to attract newer customers.
In the month of February, revolving credit stood at $855.8 billion. However, in the month of March, this figure dropped to $852.6 billion. Banks and other financial institutions are now grinning wide, since they consider this to be a significant change in the right direction. Considering the poor adverse financial implications of poor debt management is now behind them the banks are slowly opening their doors to more business, but approaching it in baby steps.
Fitch Ratings, which ran a survey to find out the number of customers who were paying off their debt on time had some good news to report. The survey clearly indicates that almost all customers are willing to push their limits to ensure their credit card dues are paid off on time. The charge offs on credit cards that stood at 11.27% till the month of February, showed a decrease of 0.34% and stood at 10.93% in the month of March.
Another charge off indication, delinquencies, also showed a fall during this period. There was a 5.74% decrease in the number of accounts that were not paid for over a month and a 4.27% decrease in the accounts not paid over the last 2 months.
The onset of recession and increased unemployment rate infused sense into more consumers who learnt to manage their credit card dues better.
