Amidst continuing uncertainty in the economy more and more consumers are paying back their balances. This has resulted in the average credit card debt amounts coming down to an 8 year low figure during the second quarter. The average debt on the credit card owed by the US credit card customers has dropped to 4591 dollars during the last quarter after it fell by 4.1 percent in the last 3 months. This information has been provided by the credit reporting firm TransUnion. The debt during the same time last year was 5719 dollars which is a difference of 13 percent.
This has been the first time since the first quarter of 2002 when the average credit card balances of the first quarter as owed by credit card customers on cards such as Visa or MasterCard was below the 5000 dollar limit. The last 5 quarters have seen consecutive decreases in the balances on credit cards after consumers have continued to pay down whatever they owe to the credit cards as a response to high unemployment and economic uncertainty, according to Ezra Becker, who is a director of TransUnion`s financial services business unit.
Many consumers are becoming more cautious about their finances due to the stagnant global economy. Extra cash is all being used towards paying global balances. Consumers according to Becker have realized that material improvement in unemployment is highly unlikely and hence it is a good time to balance saving versus spending. It is still not known if this is going to be a dynamic change or it is going to be a paradigm for consumer behavior in the future. The debt is at its highest in the state of Alaska where it has increased by 7.4 percent to 7148 dollars. Alaska remains the only state which has shown an increase in the debt. Alabama is on the other end of the spectrum where the debt has decreased the most. It has dropped by 27% to 4753 dollars. The lowest average credit card balance has been shown by the credit card customers in Iowa.
The recent series of legislations introducing rules on credit cards has created a new focus and interest over the credit card industry including late charges, disclosures and also interest rates. The timely payments by credit card customers will also mean slimmer profits as the interests disappear. This also includes late fee that is charged on delinquent customers.