More consumers may need a credit fix in the coming months, as there has been a large proportion of credit default levels recorded around the country in recent months. This may encourage some consumers to look for a way to get out of debt and improve their credit rating.
The level of credit defaults rose for consumers in November to a level of 1.64 percent, a report from Standard & Poor's and Experian explained. This was an increase from October's level of 1.55 percent, as well as a hike from September's 1.46 percent – the lowest level since the recession ended.
Despite this, bank card defaults declined markedly during November, according to the Consumer Credit Default Indices report from the two organizations. The figure fell to 3.58 percent that month, which was the lowest since the end of the recession. It dropped from October's level of 3.68 percent.
Default rates for first mortgages, meanwhile, climbed to 1.58 percent last month, the report explained. That level was higher than October's figure of 1.47 percent, as well as the lowest level since the recession – 1.36 percent in September. Second mortgage defaults dropped to a rate of 0.62 percent last month, which was the lowest level on record. This figure fell from October's total of 0.65 percent.
"The national composite showed an increase in consumer credit default rates for the second consecutive month in November," said David Blitzer, managing director and chairman of the index committee for S&P Dow Jones Indices. "This increase in national default rates was solely driven by an increase in the first mortgage default rate. All other loan types – auto loan, bank card and the second mortgage posted decreases in their default rates in November."
When examining the regional situation, some areas performed better than others. The report explained that Miami experienced the highest delinquency level increase, which was 22 basis points in November. The city's default rate was the highest, as it had a figure of 2.66 percent. Los Angeles, New York and Chicago all experienced the next-highest increase levels, with gains of 16, 12 and seven basis points, respectively. However, New York experienced the lowest default rate at 1.47 percent. Additionally, Dallas' rate dropped one basis point from the previous month.
Some consumers trim personal spending levels
While some Americans struggled with debt issues in recent months, others looked to do something to prevent these issues in the future. Nearly one-third of consumers noted they trimmed their spending levels in the past month, mainly because of their worries regarding the "fiscal cliff."
The Financial Security Index by Bankrate.com explained that close to 75 percent of consumers are not as comfortable with the amount they saved. The last time there was this much financial concern from consumers was one year ago. This information was also a stark change from the past several months, where more consumers felt better about their debt situations. Additionally, this was the second month in a row where sentiment declined, overall.
"The risks of going over the fiscal cliff are beginning to resonate with consumers much the way they have with businesses that have held back in recent months," said Greg McBride, senior financial analyst for Bankrate.com. "The combination of tax hikes and significant spending cuts would push the economy into recession, and one-third of consumers are already beginning to cut back on spending due to the looming uncertainty."
Bankrate.com's index dropped to 95.6 in December, which was the lowest figure recorded this year. Every category in the report experienced a decline during the month, including debt, net worth, job security, savings and overall financial situation. This was the second month in a row where such declines occurred. Any figure less than 100 on the index suggests consumers' financial security levels are low.