Living within their means

Consumers are using credit more responsibly, according to the latest delinquency data released by Target. The percentage of accounts 60 days and 90 days past due in Target’s credit portfolio experienced meaningful declines during March, and are now at their lowest level in more than two years.

That likely means a couple things. Consumers behaved more responsibly last November and December when it came to using credit to make holiday purchases, so when bills hit in January, February and March they were able to honor their obligations in a more timely manner. The other explanation is that Target is not reaping the benefits of a multi-year effort to weed deadbeats from its portfolio through a combination of more restrictive lending standards and by writing off balances and closing accounts of customers deemed unlikely to ever pay their bills.

In March, Target reported that 3.6% of accounts were 60 days past due, compared with 4% the prior month and well below the peak of 6.6% experienced in November 2009. A similar situation existed with accounts 90 days past due. In March, only 2.6% of accounts were 90 days past due, compared with 2.9% the prior month and well below the peak level of 4.7% experienced in November 2009 and January 2010.