bank rates

New Rules Help Lower Credit Card Defaults

Only 1.11% of borrowers fell behind on their credit card payments during the first three months of the year, according to credit reporting agency TransUnion.

That’s down from the last three months of 2009 and the first quarter of 2009 — when the recession was raging and the rate of new defaults peaked at 1.32% of accounts.

Default rate dropsRichard Hastings, a consumer strategist with Global Hunter Securities, told the Associated Press that about one-third of that decline was due to the Credit Card Accountability, Responsibility and Disclosure Act, which took effect in February.

The new federal regulations that banned many of the industry’s most abusive fees and practices resulted in fewer cardholders facing higher payments they couldn’t afford.

Hastings said the rest of the drop could be attributed to cardholders’ improved efforts at budgeting and the effect of tax refunds, which many people used to pay down debt in the first quarter.

TransUnion says the average balance fell to $5,165 at the end of March, down from $5,776 at the start of 2009.

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Comments (2)
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2 Existing Comments
  1. CrankySaver said:
    on May 19th at 08:43 am

    More good news about the credit card reforms. USA Today says the new rules will save consumers $5 billion in fees this year alone. That’s money that will be staying in our pockets rather than going to the banks.

  2. Pam said:
    on May 20th at 12:05 am

    This is due to better economy and has nothing to do with the reform.