Consumer Credit Default Rate Near Lowest Level of Year in November

Consumer credit defaults were stable at low level as the holiday shopping season got into full swing this year, according to new data from S&P and Experian.

S&P Dow Jones Indices and Experian released data through November 2018 for the S&P/Experian Consumer Credit Default Indices.

According to the report, the bank card default rate was unchanged at 3.09%. The auto loan default rate increased one basis point to 0.93%. The first mortgage default rate was one basis point higher at 0.64%.

In November 2018, all loan types showed a default rate within one basis point of the prior month. This stabilization coincides with lower default levels, with each of bank cards, autos, and first mortgages reaching their lowest levels of 2018 within the past three months.

What this means for you:

Low default rates give lenders confidence, which is important right now since interest rates have been rising. The Fed recently announced plans for two further increases in 2019.

Higher default rates might make lenders more cautious in the new year, which could mean higher rates and/or tougher approvals for consumers on a range of loan products.

So, what we’re seeing in the data is an early indication that the strong economy is helping people to manage their debt despite higher rates on such things as mortgages and certain credit cards.

That’s a good sign.

Your Credit Union can help:

One great option for managing your debt is to consolidate high interest credit card balances into a low-interest personal loan. Your local credit union has some fantastic options for helping you do just that.

With interest rates rising it’s good to get ahead of the increases, and pay off your balances as fast as you can. Go see your credit union to find out how you can accomplish this goal as soon as possible in 2019.

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