Consumer Credit Defaults Remain at Low Level

As we head out, (or log in) for holiday shopping we’re greeted by a bit of decent news from S&P Dow Jones Indices: consumer credit defaults are unchanged going into November, and remain at a low level. This means that lenders are feeling the warm holiday glow of generosity, and holiday shoppers can only benefit.

According to data through October 2019, the S&P/Experian Consumer Credit Default Indices show that the composite rate was unchanged at 0.93%. The bank card default rate fell 44 basis points to 2.88%.

The auto loan default rate was down two basis points to 1.03%, and the first mortgage default rate increased four basis points to 0.77%.

Three of the five major metropolitan statistical areas showed higher default rates compared to last month. New York showed the largest increase, up 11 basis points to 1.07%.

The default rate for Dallas rose four basis points to 0.97%, while the rate for Miami was up one basis point, to 1.31%. The level for Los Angeles dropped seven basis points to 0.65%, while the rate for Chicago was two basis points lower, at 1.17%.

Overall, this report paints a favorable picture on consumer credit: people are paying their credit card bills and loan payments.

If you’re in need of some credit this holiday season, (and most of us are), you should find lenders in a good mood. Provided your credit score is up to snuff.

But do try to keep borrowing under control. If you should find yourself with a bit more high-interest credit card debt than you can quickly pay off, consider consolidating that debt into a low-interest personal loan. Your credit union can help you with that. Your CU can also help you put together a reasonable budget for the holiday spending. (In other words, go see your credit union).

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