With the world economy on the mend, we're starting to get used
to hearing good financial news. So far in 2013, home prices are
on the rise and the stock market is doing well. It seems we're
finally out of the (recessionary) woods.
Unfortunately, though, the economic downturn doesn't seem to
have changed our spendthrift ways. The news about credit card
spending for 2013 is in, and it's not all good: More of us are
paying our credit cards late as the year draws to a close.
Late payments jump in the third quarter
TransUnion, one of the major credit reporting agencies in the
U.S., reported recently that late payments on credit cards jumped
between July and September. During that time, 1.36% of credit
card users in the U.S. were 90 days or more overdue on credit
card payments. This is an increase from the second quarter, when
only 1.27% of credit card customers were 90 days past due.
Economists think back-to-school spending in the late summer
and early fall is probably the reason for the jump in late
payments. TransUnion predicts that past-due payments will make
another jump in the fourth quarter of the year as people use
plastic to buy holiday gifts that they can't afford to repay
before the bill comes due. After all, if we're not budgeting for
notebooks and pencils, we're probably not budgeting for Christmas
presents or New Year's parties, either.
Good news, bad news?
While the news that Americans are falling behind on their credit
card payments may seem like completely bad news, the numbers from
the third quarter of 2013 aren't as dire as they seem. Even
though we did worse with paying our credit cards on time at the
end of the summer than how we did at the beginning, compared with
July through August of 2012, we've actually made some
In the third quarter of 2012, Americans were past due by at
least 90 days on their credit cards at a rate of 1.5%, which is
much higher than the 1.36% overdue rate we're looking at right
now. What's more, overall delinquency levels are currently at
their second-lowest rates since TransUnion started keeping
records in 2007.
Avoid paying late if you can
Despite the mixed news about late payments on credit cards in
2013, it's important to take steps to avoid paying your own
credit card late if you can. Failing to make a credit card
payment on time can take a toll on your credit score; 35% of your
score comes from your history of making bill payments by their
due dates. This means that falling behind can really pinch.
To steer clear of making this mistake, consider the following
- Track your spending carefully. This way, you'll be able to
keep tabs on how much you'll owe at the end of the month and
avoid charging more than you can pay off.
- In the event that you can't pay your credit card bill in
full, be sure to make the minimum payment by the due date. It's
not ideal, but at least you'll stay current.
- If you struggle with remembering to pay your credit card
bill on time, set an alert on your phone or mark your calendar
with your bill's due date. This way, it will be harder to
- If you do end up forgetting to pay your bill by its due
date, call your credit card company right away, apologize, and
make the payment immediately. Being upfront with your card
issuer is the best way to avoid late fees, and you might also
be able to convince them not to report your late payment to the
The bottom line
Although late payments on credit cards are up in the second half
of 2013, they're still low by historic standards. And regardless
of current data, you should be taking steps to make sure you
don't end up a statistic. Make it a priority to pay your credit
card bill on time!
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