The Federal Reserve released new data this week on delinquency and charge-off rates at U.S. commercial banks for the fourth quarter of 2011. For consumer credit cards, the delinquency rate fell for the 10th consecutive quarter to 3.27% during the October-December period last year, dropping to the lowest level since a 3.24% reading in the third quarter of 1994, more than 17 years ago (see blue line in chart). Compared to the 4.50% quarterly average since 1991, the delinquency rate on credit cards is now about a full percentage point below the long-run average.

For all consumer loans, the fourth quarter delinquency dropped to 3.08%, the lowest rate since the 3.0% rate in the second quarter of 2007 before the recession started (see red line in chart). The second quarter delinquency rate is also below the 3.50% historical quarterly average since 1991.

Delinquency rates for consumer loans and credit card debt are both back to pre-recession levels, and credit card delinquencies are the lowest in 17 years.  Likewise, the charge-off rates for all consumers loans and credit card loans are both back to pre-recession levels (data here). The drop in delinquency and charge-off rates for consumer debt is consistent with the drop in the household debt ratio in Q3 last year to 11.1% (red line in chart below), the lowest since 1994. 


When it comes to managing debt, American households seem to be acting more and more responsibly, maybe because of some hard lessons learned during the recession about fiscal responsibility.  Meanwhile, the politicians in Congress seem to be acting less and less responsibly, as the national debt (about $15.1 trillion) now approaches 100% of GDP ($15.3 trillion), see chart below.