US Households Managing Debt Better Than 20 Years Ago

The Federal Reserve just released new data that shows delinquencies and charge-off rates are the lowest since the Fed started tracking the data in 1991. The delinquency rate for consumer credit cards has fallen for the 11th straight quarter to 3.07%.

Consumer loan delinquency rates are also down, edging slightly above the 2.8% seen in the first quarter of 2006, before the most recent recession. The overall delinquency rates and charge-off rates have finally returned to pre-recession levels.  The household debt service ratio, the required payments on mortgage and consumer debt as a share of disposable income, dropped in the fourth quarter of last year to 10.88%. This is the lowest rate since 1993. The household financial obligation ratio, which includes rental payments, insurance, and property tax, also dropped in the fourth quarter of 2011 to 15.93%. This is the lowest ratio since 1984.

These number basically say that American households seem to be managing their debt better today than at almost anytime in the last 20 years.