Experian: Credit card delinquencies drop below 2007 levels

Experian's latest report on credit card payments in 30 metropolitan statistical areas (MSAs) shows that all areas studied have improved in on-time credit card payments since 2007. However, the study shows that nationwide growth in mortgage delinquencies outweighs the improvements in card payments.

In terms of credit card payments, Cleveland, San Antonio and Cincinnati all improved 30 percent or better. Miami, Phoenix and Tampa showed the least improvement, but no city was worse off than in 2007, according to the study.

On average nationwide, 20 percent fewer credit card payments were 60 days late compared with 2007. But the study found that over the same time period, 25 percent more consumers were paying their mortgage 60 days late.

The credit reporting bureau reviewed its data for the top 30 American metropolitan areas, discovering a nationwide trend toward paying monthly credit card bills on time and avoiding delinquency, while simultaneously showing an increasing trend toward getting behind on mortgage payments.

Many cities in the bottom third of the survey experienced significant housing and employment challenges in the past 10 years, partially explaining the trend, according to Experian researchers.

The list below shows the five MSAs with the greatest improvement in 60-day credit card payments since 2007, along with the percentage change:

  • Cleveland (34.7% more on-time credit card payments than in 2007)
  • San Antonio (30.5%)
  • Cincinnati (30.0%)
  • Dallas (28.8%)
  • Houston (28.6%)

The five MSAs with the smallest reductions, along with the percentage change:

  • Riverside (9.4% more on-time credit card payments than in 2007)
  • Seattle (8.0%)
  • Tampa (5.3%)
  • Phoenix (2.4%)
  • Miami (1.4%)

Meanwhile, Experian's study also revealed four cities where residents, despite making improvement in paying their credit cards on time, had fallen significantly further behind on their mortgage payments:

  • Portland (99.9% more delinquencies than in 2007)
  • Phoenix (78.4%)
  • Baltimore (66.8%)
  • Seattle (65.1%)
  • New York (49.4%)

Experian's numbers reflect a shift in mortgage payment pressure to some new cities where consumers struggle to make ends meet. A similar TransUnion survey in 2010 found that many Americans pay credit card bills while letting mortgages fall behind for a few reasons, notably:

  • Credit card companies tend to initiate collection calls sooner than mortgage companies.
  • Many Americans use rewards credit cards to manage regular bills, making monthly payments part of a necessary household routine.
  • Some Americans pay their smallest bills first, prioritizing credit card minimum payments before larger mortgage payments.

Bright spots in the survey suggest that the worst effects of the recession have subsided in hard-hit portions of Texas and California. Experian spokespeople told reporters that the survey shows overall economic improvement across the United States, but that consumers still had some financial bad habits to break. For instance, couples letting payments slip on one partner's account might not realize the negative impact a lower credit score may have on joint credit card accounts or on insurance premiums. The credit reporting agency reminded consumers to pay all monthly bills on time or to work out payment arrangements that avoid negative credit report entries.