As reported by the AP on MSNBC, Late credit card payments drop in 3rd quarter.  With a headline like that, I decided to read the article.  According to the referenced TransUnion study, late payments on credit cards during the third quarter (ending at the conclusion of September) were lower than they were in the previous quarter.

You: So does this mean the post office is doing a better job with its deliveries?

Probably not.

You: Darn it.

Perhaps people are choosing to (and are able to) become ever so slightly more responsible with their borrowing.  Maybe they understand the importance of paying their debts back and the incredible costs (e.g., interest, late fees, uncomfortable phone calls) of failing to do so in a timely manner.

You: So what is the percentage of credit cards that are paid late?

Approximately 1.1%

You: That’s it?

That’s all.

You: I would have thought it would have been higher.

In certain parts of the country, like the housing bust states of Nevada, California, Florida, and Arizona, it’s a fair bit higher, but in no case is it higher than 1.5%.

You: So why does the media make it sound like the sky is falling, economically?

This is just one measure. Furthermore, it isn’t that hard to simply be on time with you credit cards yet be in a personal financial crisis.

You: What do you mean?

To be on time, one only needs to make a minimum payment, often as low as 4% of the total outstanding balance.

You: Just 4%?

That’s it. Look, if you owe $5,000 on your credit card bill, are paying 25% APY, and earn $20,000 a year, you’ve got serious financial issues.  But if you cam come up with just a $200 a month, you’re not delinquent on your credit card bill and you’d show up as doing just fine in the statistic reported.

Yet another reason not to get excited about headlines.  The devil’s is always in the details.

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