Credit card delinquencies dropped once again in first quarter

The number of consumers who are trying to reduce debt but still facing severely delinquent accounts fell once again in the first quarter of the year.

The rate at which consumers fell 90 days or more behind in paying at least one of their credit card accounts slipped once again, to 0.74 percent in the first three months of the year, according to the latest quarterly figures from the credit bureau TransUnion. This was down from 0.88 percent in the previous quarter, and 1.11 percent from the same period in 2010. Further, it was the lowest rate seen since the third quarter of 1996.

In addition, the credit monitoring agency expects that the numbers will continue to improve later in the year, the report said.

"Based on our current economic assumptions, TransUnion believes that the 90-day credit card delinquency rate will still be impacted by seasonal factors, but generally continue to drift downward below 0.7 percent by the end of 2011," said Ezra Becker, vice president of research and consulting in TransUnion's financial services business unit.

During the first quarter, the average consumer saw the amount they owed on their credit card accounts fall by 5.8 percent to $4,679, down from the $4,965 observed in the fourth quarter of 2010, the report said. It was the lowest average observed since the third quarter of 2010, which stood at $4,695. In addition, it was well below the peak seen during the recession of $5,776 in the first quarter of 2009.

On a state-by-state basis, credit card delinquency was the highest in Nevada at 1.16 percent, the report said. Florida (1.04 percent) and Mississippi (0.92 percent) rounded out the top three. The lowest rates were observed in North Dakota (0.36 percent), Alaska (0.46 percent) and Vermont (0.48 percent).

However, those were all improvements over the fourth quarter of 2010, as only the District of Columbia saw an increase in delinquency during the first quarter of this year, the report said. Vermont saw the largest quarter-over-quarter drop, at 22.6 percent. North Dakota, at 20 percent, saw the second-largest drop.

Many consumers have been able to sort out their credit card problems by seeking the help of reputable debt settlement agencies. This process is viewed by many experts as an excellent alternative to bankruptcy.