One of the new studies conducted in recent times reveals that despite the fact that the number of delinquencies being reported by the credit card lenders is seeing the downward trend, the path to recovery is being really slow. This is because the fall in the delinquency rate each month is marginal clearly revealing that all is still not well. The slow recovery rate coupled with the double digit unemployment shows that the progress in the economy is being marginal.
Based on the figures revealed by the American Bankers Association, the delinquency rates across all credit card lenders in the second quarter of this year averaged around 3.62%. While it is no doubt an improvement over the average of 3.88% in the first quarter, the difference is marginal.
The figures this year are definitely better compared to the 5 percent delinquency rate reported in the second quarter of last year. Despite this marked improvement, the troubles are far from over. American Bankers Association`s Vice President and also a senior economist, Keith Leggett said that the reason for this very slow progress is the persistent problem of unemployment.
He went on to say that people are still struggling in terms of finances. The amount of job vacancies they expected to be created did not happen which has led to people struggling to make their credit card payments and also make ends meet.
Another reason for the delinquency rate to show only marginal and not marked improvement is because of many banks and financial institutions are writing off all their bad loans. Leggett however appreciated the fact that despite all these roadblocks, consumers are making effort to pay off their credit card dues.
Added to the drop in the delinquency rates on credit card, the delinquency rate in terms of car loans also saw a reduction. Even home loans and equity loans are seeing a reduction in the delinquency rates this year. Leggett said that the delinquency pattern is a clear indication that customers are channelizing their finances towards paying off their debts and saving a minimal amount for their essential needs.
He also said that Americans are now clearing weighing their needs and luxuries and spending on only those items they cannot live without. According to Leggett, the figures for the third quarter is also likely to show the same trend. The economy that was showing signs of recovery again plummeted because of the increase in the unemployment rate over the last few months.