Smart Borrower Blog

Credit Card Delinquencies Fall Again As Consumers Shape Up


Aug 14th, 2013 @ 7:01 PM by Amber Nelson


American consumers continued to put their best financial foot forward during the second quarter of this year, according to recent data from TransUnion Corp, as they paid down their credit card debt and made more payments on time.

Consumers had an average credit card debt of $4,965 during the second quarter. While that is up from $4,875 during the first quarter, it is down 0.12 percent compared with the previous year. To put it into perspective, the average second quarter credit card debt since 2000 has been $5,169.

And delinquencies fell to an almost 20-year low. Credit card accounts that were delinquent by at least 90 days fell to 0.57 percent of all accounts, down from 0.63 percent during the second quarter of 2012 and down from 0.69 percent in the first quarter. The last time the rate was that low was in the second quarter of 1994 when it hit 0.56 percent. The average delinquency rate during the second quarter since 2000 has been much higher at 1.09 percent.

“Despite recent improvements in the employment situation, consumers continue to value their credit card relationships as a primary means of liquidity. This is best demonstrated by the historically low credit card delinquency rates we observe today,” said Ezra Becker, vice president of research and consulting in TransUnion’s financial services business unit in a statement. “Credit card debt also remains relatively low, and while we did observe a quarterly rise in debt, we would need to see a few more quarters of increases to describe it as a significant trend. Having said that, the data supports that consumers will continue to prioritize their credit card relationships over other credit obligations, and delinquencies should remain low into the near future.”

The improvements are widespread, according to TransUnion, as 74 percent of the metro areas it tracked had yearly declines in their delinquency rates. Seattle led the pack with a 26.5 percent drop from the 2012 second quarter. Denver also had a sizable decline, falling 21.4 percent and Minneapolis was a close third with a 21.3 percent drop from the previous year.

Based on the current pace of the economy, TransUnion expects things to remain fairly constant into the third quarter when they predict the delinquency rate will be 0.60 percent.

About Amber Nelson
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.

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