We’re Finally Paying Our Bills On Time: Can We Stick With It?

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Congratulations, America — it looks like you’re starting to get the hang of this “payment due date” concept. The number of retail credit card accounts in late-stage delinquency is at a six-year low, according to Fitch Ratings, and charge-offs are down 38% from a little over two years ago. But will this new stability last? Credit card companies are cranking out new offers like mad, and we’re picking up what they’re putting down.

Fitch says that the number of card accounts past due by more than 30 days dropped by about half a percentage point in only a month. Issuer Capital One also reported a small month-over-month drop in delinquencies for April.

New data from credit bureau Experian found that the rate of 30-day-plus delinquencies dropped from 5.3% to 3.8% over the course of a year. Credit bureau TransUnion issued similar findings: The number of accounts with payments overdue by 90 days or more declined slightly, as did the average amount of credit card debt, which fell by nearly 5% to $4,962 between the final quarter of 2011 and the first quarter of this year.

What’s a little more disturbing is that TransUnion also found that average credit card balances were up by around 6% from the first quarter of last year. (The quarter-over-quarter drop was attributed to people paying off holiday-related purchases.) Compared with a year ago, we’re spending more: Experian says retail and food service spending is up by 8% from a year ago. “Early reports for 2012 see that trend continuing,” a recent Experian white paper noted.

(MORE: In November, We Racked Up $5.6 Billion More Credit Card Debt)

It’s increasingly apparent that at least some of this increase in consumption is due to the increasing availability of credit. Experian says banks issued $62 billion in new credit in the fourth quarter of 2011 alone, and TransUnion reported a 20% year-over-year jump in the number of credit cards issued in 2011. Federal Reserve stats show that consumer credit increased by more than $21 billion in March.

While credit card companies are fighting the hardest to get “super-prime” customers — people with top-tier credit — banks are increasingly showering even subprime consumers with credit offers. And we’re responding to this marketing deluge. Experian says both the top and bottom segments of the credit score spectrum were each issued 45% more credit when compared with a year ago, while TransUnion says roughly a quarter of new cards were issued to people with subprime credit.

(MORE: $54 Billion Closer to Our Next Financial Crisis)

So, we’ve got banks lending to increasingly risky borrowers, and people spending — and borrowing — more. Sounds like 2007 all over again, except the housing and labor markets hadn’t tanked yet. While reports of declining delinquencies are good news, you can’t help but worry that banks and borrowers are quickly digging themselves back into the spiral of defaults and downgrades from which they’re only just starting to emerge.