Credit-Card Debt Reaches $1T, Now You Do Not Need to Pay Your Balance

Do you pay your credit-card bill every month? A record number of people are not paying at all!

"Revolving credit", a close approximation of credit card debt, totaled about $940B in March according to the Federal Reserve. It also reported that 6.5% of credit card debt was at least 30 days past due in the first quarter, the highest percentage since 1991. The amounts being written off are also at peak levels.

The New York Times reports that credit-card companies and banks are letting people not pay what they owe and are settling for far less that what it is owed.

"They say many credit card issuers have revised internal guidelines to give front-line employees the power to cut deals with consumers. The workers do not even have to wait for customers to call and ask for a break."

BAC and AEX publicly state that they decide on a case-by-case basis. Other institutions are reluctant to confirm the practice, but the NYT has pently of examples.

TransUnion says that nationally, in Q1 2009 the bankcard delinquency rate (the ratio of bankcard borrowers 90 days or more delinquent on one or more of their bankcards) increased to 1.32%, up 9.1 percent over the previous quarter. Year over year, bankcard delinquencies increased 11% from 1.19 to 1.32 percent. This number willl surely go up when the numbers are published in Q2 2009.

For the rest of us, whey did we ever bother to pay our bills in full?