More consumers are making their credit card payments on time, as the delinquency rate on credit cards dropped in the second quarter to one of its lowest levels since 1994.

TransUnion reported the percentage of credit card borrowers at least 90 days past due dropped to 0.63% in Q2 2012, compared with 0.73% in 1Q12. The delinquency rate is at its lowest level since the second quarter of last year, when it was 0.60%. Prior to 2Q11, the last time the delinquency rate was below its current level was 1994. 

These positive trends are beneficial to credit card ABS, although the advantages might be offset by some "headwinds" expected to hit the sector, Wells Fargo analysts said..

The recession has made consumers more responsible users of credit cards, said Ezra Becker, vice president of research and consulting in TransUnion’s financial services business unit.

“These low delinquency rates reflect both continued conservatism in lender underwriting and the ongoing prioritization of card payments among consumers,” Becker said.

The drop in delinquency comes at the same time consumers increased their overall credit card debt. The average credit card debt per borrower rose 5.7% in the past year, from $4,699 in the second quarter of 2011 to $4,971 during Q2 2012.

Financial institutions made several strategic changes during the height of the economic downturn that are paying off for issuers today, said Bill Hardekopf, CEO of, Birmingham, Ala.

“They cancelled a number of high-risk accounts, cut the credit limits on millions of other accounts, and tightened the approval rates, so it is more difficult to get a new credit card if you have average or poor credit,” he said.

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