Accelerated holiday sales kept some big spenders from making payments on their credit cards in the last three months of 2012, in line with seasonality. The 90-day delinquencies were reported by TransUnion at .85 percent of all credit card balances, up from .78 in 2011.
The seasonality in credit card payment trends is due in part to aggressive spending by holiday gift givers in the fourth quarter. Additionally, many workers regain employment only to lose it later in fast-paced temporary positions at the nation's retail companies that struggle to keep up with holiday-driven demand.
The peak in late payments is smoothed in January when cardholders who miss payments start making payments to catch up. The delinquency rate then falls to normal levels in the first quarter, as there are fewer reasons to spend and more reasons to repay balances. Tax refund payments also help speed up credit card debt repayment, which is regarded as one of the worst debts to carry given its low monthly payments and high interest levels.
Luckily for most, the credit card debt per borrower is on the decline. In the United States, credit card holders had an average of $5,122 in credit card debt, down 1.6 in the fourth quarter of 2012 from the same period in 2011. However, debt balances grew in the quarter leading up to the fourth quarter, led by heavy back to school spending.
A falling consumer debt level indicates that Americans are well-financed and properly managing their finances. It is a lagging indicator compared to the delinquency level, which is usually regarded as a leading indicator for defaults and consumer weakness.