TransUnion Says Late Credit Card Payments Down | CreditShout

TransUnion Says Late Credit Card Payments Down

By Dawn Allcot / March 9, 2011

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TransUnion reports more good news in regard to the economy, for those of us hunting down as many positive economic indicators as we can. (And why wouldn’t you want to look on the bright side of something as important as our country’s financial future?)

Through its Trend Data Base, a quarterly analysis of credit card industry trends, the major credit reporting agency discovered that delinquent debt of more than 90 days is down by 32% in Q4 2010 compared to Q4 2009. The U.S. credit card delinquency rate currently sits at 0.82%. However, most of this 32% drop occurred earlier in the year. The delinquency rate is down only 1.2 % from Q3 2009. TransUnion experts expect the trend of dropping delinquencies to continue in Q1 2011 and beyond.

Trend Data at a Glance: Where Does Your State Stand?
  • States with highest credit card delinquency rates: Nevada (1.27%); Mississippi (1.13%); Florida (1.07%).
  • States with the lowest credit card deliquency rates: North Dakota (0.45%); Alaska (0.54%); South Dakota (0.55%)
  • States with highest average credit card debt: Alaska ($7,010); North Carolina ($5,680); Tennessee ($5,605).
  • States with the lowest average credit card debt: Iowa ($3,915); North Dakota ($4,181); South Dakota ($4248)

Credit Card Use Increases, As Well

Another positive economic indicator, credit card usage, is also on the rise, according to a recent report by TransUnion.

One might think that rising credit card debt (or, at least, balances not dropping on credit cards) would be a negative economic indicator. But, during the recession, people were more hesitant to use credit. Q4 2010 marks the second time since the recession officially ended in the summer of 2009 that average credit card balances have not declined. (Although consumer credit card debt continues to drop on a year-over-year basis, according to the TransUnion report).

Some of the lack of decline can be attributed to seasonality, with consumers using their credit cards for holiday shopping. But Ezra Becker, vice president of research and consulting in TransUnion’s financial services business unit, interprets the information on an even deeper level by looking at multiple economic indicators. “Taken together, the recent news on rising consumer spending, increased demand for durable goods, the drop in the personal savings rate, and increases in consumer confidence indicate that consumers may now be demonstrating a more optimistic view of their financial outlook — possibly willing to expand their credit card use… It is a positive sign that consumers have more confidence in the increasing stability of the economy and of their own personal financial positions.”

She concludes: “From a delinquency perspective, 2010 was an excellent year for consumers as they showed continuing fiscal responsibility in working to pay down their credit card debt. Even in the presence of falling home prices, the accumulation of negative real estate equity and high levels of unemployment, consumers still have been placing a premium on paying off their credit card obligations and maintaining the health of their card relationships.”

More Facts About Credit in the U.S.
  • National average credit card debt remained flat in Q4 20101, increasing by only one dollar to $4,965.
  • Credit card debt has dropped by 8.62% from Q4 2009.
  • 33 states showed an increase in average credit card debt from the previous quarter, with Washington, D.C., Iowa and Mississippi leading the pack.
  • National credit card originations (new credit) increased by 19.1 % from this time last year. Q4 2010 is the second consecutive quarter since late 2007 that credit card originations increased.
  • Every state showed an increase in new credit, with the greatest increases in Kentucky, Nevada and Arizona.
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