Late Payments Are Dropping Thanks In Part To The CARD Act

Banks and card issuers warned against the credit card reforms that went into effect a few months back, but so far it’s been a good thing for consumers, according to new delinquency numbers.

From the Associated Press:

The rate of borrowers who fell 90 days or more behind on their cards dropped to 1.11 percent for the first quarter, down from 1.32 percent in the 2009 period, according to credit reporting agency TransUnion. The delinquency rate was also down from the fourth-quarter of 2009, when it stood at 1.21 percent.

Although a lot of this good news can be attributed to consumers who are budgeting better and spending less, an executive at the credit report agency TransUnion told the AP that the reforms have also helped. Since banks can no longer raise a customer’s interest rate without warning, and since there are now limits on penalty fees, they haven’t been able to inflate balances as quickly as in the past. That in turn has led to lower minimum payments.

“Late payment drop shows impact of credit reforms” [Associated Press]