Look at the credit card debt in the U.S. and you will find that it has touched 779 billion. Worse still, the number is still increasing. So, does this mean that Americans have not yet learned their lesson? Have they not yet managed to handle their credit card debt? This was one of the biggest problems that were unveiled when the financial crisis eroded the net worth of individuals and companies alike back in 2008. So, should we assume that we have, collectively, as a country, learned nothing from the bad experience? Actually, it may not be all that bad, says experts, who feel that Americans have actually learned a lesson from the past. Despite the alarming numbers, it does seem that the present generation Americans are being more responsible about their personal debt. There are many things that indicate this heartening turn of events.
Credit utilization is lower
The very first positive sign is that the Americans are doing better at credit utilization. During the recession, it was clear that we were using up a major portion of the available debt. Now, the credit utilization is down to 23%, showing that we are being more responsible about using up all of our open debt lines. This shows that there is less need for the average American to opt for a credit line, and this also means that we are managing to avoid new debt by sticking to the budgets.
90-day delinquency rates dropping
Delinquency rates on credit card payments indicate that the holder has bitten off more than he/she can chew or that he/she has taken on more debt that he/she can actually afford to have. The current figures show that the 90-day delinquencies have dipped, and by a substantial number. They are now just about half of what they were during the crisis and this is a massive improvement indeed. While the ideal would be for delinquencies to cease altogether, that is quite a Utopian dream to have. A significant drop in the delinquency rate is as good as you can get, feel experts, particularly given the immense number of Americans who use credit cards and run up bills every single year.
These numbers may not show that Americans are super savvy about finances now but they are certainly indicative of the increased responsibility that we are taking of our own financial health.