Credit Card Delinquencies Continue to Fall


NEW YORK (MainStreet) – Credit card delinquencies fell in the third quarter as more Americans ceased using general purpose credit cards, says TransUnion.

According to a report from the credit reporting agency, the percent of bank card borrowers who were 90 or more days delinquent on one or more of their credit cards fell to 0.83% in the third quarter of 2010, down almost 9.8% during the previous quarter. Year over year, credit card delinquencies fell by 24.6%.

“Consumers continue to show fiscal responsibility in paying down their credit card obligations,” Ezra Becker, vice president of research and consulting in TransUnion's financial services business unit, said in a press release. However, he pointed out that the delinquency rate is also being driven down as more consumers abandon their credit cards entirely.

“In 2009, well over 70 million consumers did not have an active, general purpose bank-issued credit card. During the course of one year, more than 8 million additional consumers joined these ranks, making it one of the fastest growing consumer segments,” Becker said.

TransUnion’s latest data is part of an ongoing analysis focusing on credit card, auto loan and mortgage data that’s been aggregated from its databases. In this quarter’s survey, 27 million anonymous consumer records were captured.

The agency believes that based on current trends, the 90-day credit card delinquency rate might continue to decline through the remainder of 2010, eventually dropping as low as 0.75% by the end of the year.

While the delinquency rate continued to fall, the national credit card debt average, meanwhile, increased for the first time in six quarters, rising to $4,964 from the previous quarter amount of $4,951. The increase makes sense given that during the last quarter, the amount consumers owed on their credit cards was at the lowest level it had been in more than eight years.

Year over year, however, the national credit card debt average was down 11.54%. As a comparison, the average debt in the third quarter of 2009 was $5,612.

The state with the highest average credit card debt was Alaska ($7,159), followed by Hawaii ($5,716) and North Carolina ($5,640). Conversely, the lowest credit card debt average was held by Iowa ($3,807), followed by North Dakota ($4,103) and South Dakota ($4,196).

Interestingly, the two areas of the country with the largest quarter-over-quarter drop in delinquency were Alaska (-19.2%) and Nebraska (-17.6%). Only two areas, Washington, D.C., and Mississippi, posted an increase in credit card delinquency, at 19.67% and 1.92%, respectively.

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