Credit card delinquency down, but there's more to story

Closeup of a MasterCard logo

Good news on the consumer front: We're not falling behind nearly as much on our credit card payments, with delinquencies at an 18-year low.

According to the American Bankers Association, delinquencies (meaning a payment late more than 30 days) in the third quarter of 2012 hit 2.75%. We haven't seen numbers that low since 1994.

The group found that delinquencies on car loans, personal loans and home equity loans also fell.

Now, take this news with a giant grain of salt.

The ABA says these numbers are because American consumers are strengthening their finances, which might be partly true.

"Consumers are paying close attention to their finances as they continue to pay down debt in an uncertain economy," says James Chessen, the ABA's chief economist, in a statement.

Credit Card Debt, 2011-12

Time period Outstanding balances
Jan.-March 2011 $696 billion
April-June 2011 $694 billion
July-Sept. 2011 $693 billion
Oct.-Dec. 2011 $704 billion
Jan.-March 2012 $679 billion
April-June 2012 $672 billion
July-Sept. 2012 $674 billion
Source: Federal Reserve Bank of New York

"The conservative approach consumers have taken to credit over the last several years has allowed them to better manage their debt and better position themselves for the future."

But credit card companies also have been doing major write-downs of consumer debt since 2009, when the recession caught up with all those issuers who handed out high-limit cards to anyone with a pulse.

According to the Federal Reserve, the card companies wrote down $85.6 billion in 2009, $77.1 billion in 2010, $45.5 billion in 2011 and $17.2 billion in the first quarters of 2012.

If all that debt had stayed in consumer hands, the delinquency rate wouldn't be nearly so low.

So, yes, delinquencies are down, but as is usually the case with the ABA, it's not the whole story.