Credit card debt continues to fall in financially troubled areas
While severe financial problems still plague many municipal areas around the country, a number have also seen credit card debt totals decline steeply. Experts have several theories as to why.
A total of 48 cities around the country have seen revolving debt levels decline by more than 5 percent in recent months, and more than half of those are located in areas that have levels of mortgage delinquency and foreclosure well above national averages, according to a report from the consumer advice site WalletPop. One of the primary reasons for this change is that lenders have slashed credit limits for borrowers with low credit scores, which has forced individuals to focus on paying down their debt.
Another possible reason for this is that lenders are simply writing off more delinquent borrowers’ accounts as being uncollectable and striking them from their records, the report said. However, this may be less likely because instances of default have fallen considerably for all major lenders.
Recent polls also suggest that consumers are more likely to pay their credit card bill than make their mortgage payment every month.