U.S. Credit Card Balances Down 20% Since Crisis Peak in 2008

Open credit card accounts held by Americans in the third quarter of this year were 23 percent below their peak in the second quarter 2008, and balances on those cards were nearly 20 percent below their highest levels in the fourth quarter of that year, the height of the financial crisis the preceded the current economic malaise.
The credit card debt outlook is part of the New York Fed’s Quarterly Report on Household Debt and Credit that found aggregate consumer debt fell approximately $60 billion to $11.66 trillion in the third quarter of 2011.
In the third quarter of this year, open credit card accounts declined by 6 million to 383 million, and credit card borrowing limits fell again, partially offsetting some gains seen earlier in the year.
Total consumer indebtedness decreased roughly 0.6 percent from revised second quarter findings of $11.72 trillion, the New York Fed said.
Mortgage balances on consumer credit reports fell by approximately $114 billion or 1.3 percent over the third quarter, while home equity lines of credit balances increased by roughly $14 billion or 2.3 percent.
“The decline in outstanding consumer debt reveals that households continue to try and deleverage in the wake of a challenging economic environment and large declines in home values,” said Andrew Haughwout, vice president in the Research and Statistics Group at the New York Fed. “However, our findings also provide evidence that consumer credit demand continues to increase, a positive sign for consumer sentiment.”
Non-real estate debt now stands at $2.62 trillion, about 1.3 percent above its second-quarter level.
Despite the declining debt, the delinquency rate climbed.
Overall delinquency rates increased to 10 percent as of the end of September, compared with 9.8 percent at the end of June.  About $1.2 trillion of consumer debt is delinquent, with $834 billion being seriously delinquent (more than 90 days).
About 2.5 percent of current mortgage balances transitioned into delinquency in the third quarter, reversing a recent trend of declines in this category.

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