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 16,976.01 63.90 0.38%
Nasdaq 4,471.43 28.73 0.65%
S&P 500 1,978.28 8.33 0.42%
Treasuries 2.51 0.05 1.99%
Data as of 9:31am ET
Company Price Change % Change
Comcast Corp 54.99 0.26 0.48%
EMC Corp 29.47 -0.20 -0.67%
Twenty-First Century... 32.15 -0.31 -0.96%
Masco Corp 21.71 1.44 7.10%
Interpublic Group of... 20.54 0.31 1.53%
Data as of Jul 29

Sections

McDonald's in Japan says profit and sales will fall short of expected targets this year, as fallout widens over a major food safety scandal. More

The economy grew at a 4% pace in the second quarter, a rebound from the big, weather-induced decline in the first quarter. More

Bunch o Balloons allows multiple water balloons to be filled at once. Parents are loving it -- to the tune of $645,000. More

Steve Mason, a pastor from California, inherited more than $100,000 in student loan debt when his 27-year-old daughter died suddenly in 2009. With interest and late penalties, the debt has since ballooned to $200,000. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.