TransUnion: 3Q credit card delinquency rate rises

[December 03, 2008]  NEW YORK (AP) -- The percentage of people who were delinquent on their credit card payments rose in the third quarter from the same time last year, while average debt per borrower jumped 7.7 percent, according to credit reporting agency TransUnion LLC.

For the quarter ended September 30, 1.09 percent of credit card holders were delinquent at least 90 days on one or more of their cards. That compares with 1.03 percent for the third quarter of 2007, and an increase from 1.04 percent in the second quarter of 2008.

The rise in delinquencies in the third quarter reflects cyclical trends that show late payments tend to rise in the late summer months, according to Ezra Becker, principal consultant in TransUnion's financial services group. The year-over-year gain is yet another indicator of the difficult economy, he said, although it also shows that more than 98 percent of people are paying their credit card bills on time.

"Clearly there are increases in certain states that are higher than others, so there's an economic impact there," Becker said. "But really, we haven't seen delinquencies on the card side reach the historic highs that we've seen on the mortgage side."

He noted that card issuers have more flexibility than mortgage issuers, and can do things like lower credit card limits to stop holders from using their accounts.

The figures are extracted from TransUnion Trend Data, which consists of 27 million consumer records randomly sampled each month from the credit reporting agency's national consumer credit database.

Third-quarter delinquency was highest in Nevada, at 1.79 percent, followed by Florida, at 1.45 percent. These two states are among the hardest hit by the housing and mortgage crisis.

The lowest credit card delinquency rates were found in Vermont and North Dakota, at 0.70 percent.

Meanwhile, the average debt per borrower for the second quarter stood at $1,742, up 7.7 percent from $1,617 in the third quarter of 2007. Debt per borrower increased 1.4 percent from the second quarter, when it stood at $1,717. "This is a clear impact of the recession," Becker said. "People are relying more on their credit cards to make ends meet, to bridge the gap paycheck to paycheck."

The highest state average card debt was in Alaska, at $2,486, followed by Tennessee at $2,168 and Alabama at $2,038. Residents of Iowa had the lowest average debt of $1,305, with North Dakota second at $1,306 and South Dakota third, at $1,398.

Becker said the demand for credit cards now outstrips the supply for "the first time in recent memory."

[Associated Press]

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