Over the past few years, credit card balances were paid down and delinquent accounts became less common. But two years after the COVID-19 pandemic began, those trends — spurred by increased savings and relief programs — could evaporate, especially as inflation soars.Over the past few years, credit card balances were paid down and delinquent accounts became less common.
It was the first time since at least 1999 that credit card balances were at 21% of their limits. They hit 20% in the first three quarters of 2021. Tap to View Those national balances rose in the third and fourth quarter of the past year, but the end of the year has come with credit card balance increases in each of the past five years, as spending rises toward the holiday season. When data for the first quarter of 2022 is released in coming weeks, it will indicate whether this most recent jump was seasonal or the start of a more sustained climb.
Fewer accounts moved into delinquency The share of newly delinquent credit card accounts began falling in the second quarter of 2020, when the pandemic was getting into its early full swing. This downward slope has continued since. As of the last quarter of 2021, it stood at 4.1%, the lowest in at least 18 years, according to the New York Fed.
What might reverse these positive trends Pandemic relief programs such as rental assistance, mortgage forbearances, advanced child tax credits and stimulus payments all contributed to Americans saving more. This increase in personal savings meant having more money to pay for goods and services outright, and more money to pay down debt. But as these programs have subsided, so has the personal saving rate.
Don’t spend more than you can pay off in a single month Paying off your balance each month keeps your credit healthy, perhaps even “excellent” according to the credit bureaus’ systems. The myth that you have to carry debt to keep improving your credit is just that, a myth.
That’s what the administration wants… everyone to be in debt to the consortium, why do you think corporations are buying up land and houses. Americans will be renting in the future and all resources underground and above ground will belong to the rich.
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