Credit card debt at an 8-year low

By Aaron Smith, CNNMoney.com staff writer


NEW YORK (CNNMoney.com) -- The amount of credit card debt consumers are carrying dropped to an eight-year low and delinquencies continued to decline in the second quarter as consumers looked to shore up their savings.

Credit card debt fell 4.1% to an average $4,591 during the quarter, according to credit bureau TransUnion. That marks the fifth straight quarter of declines and the first time credit card debt has dipped below $5,000 since the first quarter of 2002, according to TransUnion.

"Consumers continue to pay down their credit cards in response to economic uncertainty and high unemployment," said Ezra Becker, director of consulting and strategy at TransUnion's financial services unit.

Credit card delinquencies, which measure the percentage of debtors who are at least 90 days late in making payments, also continued to slide, to a mere 0.92% . That's down a whopping 21.3% from the prior year and 17.1% from the prior quarter. Both are the biggest decreases since the recession began at the end of 2007, said Becker.

State by state: The state with the highest average credit card debt was Alaska, at $7,148, followed by Tennessee, at $5,654, and Hawaii, at $5,594.

Alaska was one of the few places where credit card debt increased quarter over quarter, along with Washington, D.C., and Oklahoma.

Alaska was also the only state to show an increase in credit card delinquency, with a gain of 7.4%. But Nevada had the highest incidence of credit card delinquency, at 1.5%.

Iowa and Alabama fared the best, with Iowa logging the lowest credit card debt in the nation, at $3,792. But Alabama took the prize for the biggest decrease in quarter-over-quarter credit card debt, with a decline of 22.4%.

While the nation's capital saw an increase in credit card debt, it also saw the largest quarter-over-quarter drop in delinquency rates, with a decline of 28.2%.

In another sign of consumers' distaste for credit card debt, fewer people are signing up for new cards. The number of new credit cards declined 6.5% year-to-year, according to TransUnion.

TransUnion's report comes just days after Synovate, the market research arm of Aegis Group, announced that credit card interest rates are on the rise.

The average interest rate on existing cards jumped to 14.7% last quarter, up from 13.1% a year earlier, said Synovate.

The increase in rates has been partly attributed to the Credit Card Accountability, Responsibility and Disclosure (CARD) Act of 2009. The legislation, which placed new restrictions on credit card interest rates and fees, gave credit card companies a limited time to hike rates. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 18,232.02 -53.72 -0.29%
Nasdaq 5,089.36 -1.43 -0.03%
S&P 500 2,126.06 -4.76 -0.22%
Treasuries 2.22 0.03 1.37%
Data as of 1:38pm ET
Company Price Change % Change
Bank of America Corp... 16.75 0.05 0.30%
Apple Inc 132.54 1.15 0.88%
Hewlett-Packard Co 34.76 0.93 2.75%
AT&T Inc 34.71 -0.42 -1.18%
Microsoft Corp 46.90 -0.52 -1.10%
Data as of May 22
Sponsors

Sections

The record airbag recall and the GM ignition switch recalls has resulted in a huge percentage of cars on the road today having been recalled. More

The True Cost, a new documentary, chronicles the evils of the clothing industry and asks us to stop buying so much cheap stuff More

Sarah Kauss launched S'well to rid the world of plastic water bottles. In five years, she's sold 4 million of her stainless steel bottles. More