TransUnion: Credit card delinquencies hit 18-month low
August 25, 2011
By: Melissa Rudy
A recent TransUnion report reveals that credit card delinquency has continued to drop in the second quarter of 2011, marking what now amounts to a year and a half of falling delinquency rates. Although delinquency rates have been dropping for the past six quarters, the improvement in the second quarter of 2011 was still unexpected - a more abrupt decrease than at any other period in the past several years.
Delinquency rates steadily improving
The total delinquency rate across the U.S. - the percentage of borrowers who are 90 days or more past due on their credit card accounts - was 0.6 percent for the second quarter of 2011. Compared to the first quarter of 2011, delinquencies fell by 18.9 percent (from 0.74 percent). That's a steep improvement over last year, a whopping 34.8 percent lower than in the same quarter of 2010 (0.92 percent).
Lowest mark in 17 years
This quarter's delinquency rates mark the lowest since 1994 - a clear indication that consumers are making an effort to curtail spending and tighten their handle on debt and financial health in the wake of the economic crisis that has spanned the past few years.
Despite a slight increase ($20) in TransUnion's computed amount of credit card debt per borrower, now $4,699, the improvement in on-time payment likely means cardholders have begun to search for low interest credit card options and other ways to repay their debt without defaulting or allowing accounts to become delinquent.
TransUnion's report also described a change in consumer behavior marked by increased credit card payments. Between the first quarters of 2009 and 2010, credit card account holders paid $72 billion more in total than they received in credit. When compared to the figures from five years earlier that show consumers borrowing $2.1 billion more than they repaid, this paints a clear picture of how the credit card climate has changed for the better.
- Studies show credit card defaults falling along with monthly balances
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- Credit cards for fair credit boost TransUnion's Credit Risk Index
- FICO survey shows banks ready to increase credit card limits in 2013
- Credit card limits increase, while balances drop in many major cities
- Credit card debt drops 28 percent
- New credit card limits highest since 2009, says Equifax
- Credit card delinquency rates rise for first time in 2012
- Credit card delinquencies down again in July, showing strength in subprime borrowing