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Consumer debt defaults hit new lows

Credit card transaction
Rayes | Photodisc | Getty Images

American households continue to make progress taming their debts.

From car loans to mortgages, the default on consumer loans continues to hit new lows, according to the latest S&P/Experian Consumer Credit Default Indices, which track the rate of consumers who fall behind on their debts.

The drop in defaults comes as a strong job market has helped boost incomes, helping consumers better manage monthly debt payments. Historically low interest rates have also helped keep the cost of those monthly payments relatively manageable.

The data also show the impact of general improvement in the housing market in most parts of the country. New York and Dallas reported their lowest mortgage default rates since April 2004, when the data was first collected. Miami—one of the hardest hit cities by the housing collapse—has begun seeing default rates decline. Default rates also fell in Chicago. But Los Angeles reported a sharp increase in defaults and foreclosures through May, the latest data available.

In addition to showing that households are breathing a little easier, the numbers should help concerns about an expected rise in interest rates later this year.

Read MoreRising interest rates: What it means for you

"The combination of low debt service and economic expansion should ease worries about the fallout some fear when the Federal Reserve boosts interest rates," according to S&P analyst David Blitzer.

Lower default rates aren't a sign that consumers are cutting back on spending, said Blitzer. He noted that consumer debt payments make up near record low levels of household income and that consumer wealth hit new highs in the first quarter of this year.