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The amount of money owed to lenders on all types of credit declined once again in the second quarter of the year, as did the total number of accounts that were behind on payments. Both measures indicate consumers may be getting a better handle on their finances.

Consumer debt slipped $53 billion from the first quarter of the year to the second, declining to a total of $11.38 trillion, according to the latest Quarterly Report on Household Debt and Credit issued by the Federal Reserve Bank of New York. This came largely as a result of declines in borrowing on mortgages, home equity lines of credit, and credit cards. The amount owed on both auto loans and education loans rose during the three-month period.

Credit card balances fell to a total of just $672 billion nationwide, the report said. That was the lowest level seen since the second quarter in 2002, and down 22.4 percent from the all-time high observed in the fourth quarter of 2008. Further, delinquencies on this type of borrowing fell to 10.9 percent, also the lowest since the final three months of 2008, and down from 11.3 percent in the first quarter.

Meanwhile, the uptick in car loans, which rose $13 billion to $750 billion, was partially offset by a decline in the delinquency rate for this type of borrowing, the report said. In all, only 4.2 percent of all auto financing was considered to be behind on payments at the end of the second quarter.

However, student loan borrowing was far more problematic, the report said. Balances on this type of financing rose $10 billion during the quarter to $914 billion, but more problematically, delinquency rose to 8.9 percent. Further, the Fed notes that the rate of late payments on these balances is likely underreported, as half of all student loans are in deferment, grace periods or forbearance, which means they cannot be counted as late.

Further, inquiries for new credit, which experts consider an indicator of demand for more financing, slipped 2 percent from the first quarter to the second, the report said.

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The latter fact may show that even as consumers have made efforts to get their finances under control, they might not yet feel completely comfortable obtaining new debt unless they feel it’s absolutely necessary.

Image: paalia, via Flickr

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