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TransUnion: Credit Card Delinquency Rates Remain Low; Subprime Borrowers Represent Larger Share of New Loans

More credit cards are being offered to subprime consumers, but delinquency rates remain low, according to the latest TransUnion (NYSE:TRU) Industry Insights Report. The credit card delinquency rate (the ratio of borrowers 90 days or more delinquent on their general purpose credit cards) remained steady at 1.19% in Q2 2015. The delinquency rate was relatively unchanged from 1.17% in Q2 2014.

Hand in hand with new account growth in the subprime credit tier (those consumers with a VantageScore® 3.0 credit score lower than 601) originations, the average new account credit line for subprime consumers continued to drop in Q2 2015. The average new credit line for this tier declined to $923 in Q2 2015, the lowest level since Q2 2012, when average new account lines reached $896.

“Subprime consumers continue to gain access to credit, but lenders have scaled back the average new credit line for this group,” said Paul Siegfried, senior vice president and credit card business leader for TransUnion. “Distribution of originations across risk tiers has remained relatively steady in the past year, indicating that lenders are deliberate and approaching subprime originations cautiously.”

“The credit card market is experiencing stabilization as delinquencies and average balance per borrower remained steady in the second quarter. Super Prime consumers have increased average balances slightly, a reflection of higher consumer confidence to purchase and carry a balance, which is a positive sign for the industry.”
Paul Siegfried, senior vice president and credit card business leader for TransUnion

Up from 154.2 million in Q2 2014, the number of consumers with credit cards increased by 6.8 million year over year. Credit card issuers reported 160.17 million consumers with credit cards in Q2 2015 to TransUnion. “We are seeing that new accounts and users of credit are a key growth driver for the first half of 2015,” said Siegfried.

The number of consumers under age 30 with a credit card balance rose to 20.73 million in Q2 2015, an 8.6% increase from 19.09 million in Q2 2014. The delinquency rate for the youngest consumer group remained above the national average in Q2 2015 at 1.80%. Average balances for the under 30 group rose slightly, up $19 from $2,135 in Q2 2014 to $2,154 in Q2 2015.

“From Q2 2014 to Q2 2015, 1.6 million more consumers under age 30 had a credit card balance, which demonstrates this group’s appetite for credit,” said Siegfried. “The under 30 age group had the largest increase of any age group, yet average balances have remained steady year over year. We’re observing consistent credit management skills from this group.”

Thirteen states experienced a decline in their delinquency rates, with Alaska (down 10.1% from 1.19% in Q2 2014 to 1.07% in Q2 2015), Washington (down 4.1% from 0.87% in Q2 2014 to 0.83% in Q2 2015) and New Hampshire (down 1.02% in Q2 2014 to 0.99% in Q2 2015) experiencing the largest declines. Average credit card balance per consumer declined in 39 states, while three states remained unchanged. North Dakota (up 0.9% from $4,283 in Q2 2014 to $4,322 in Q2 2015) and Hawaii (up 0.7% from $5,539 in Q2 2014 to $5,579 in Q2 2015) experienced the largest average balance increases.

This information is reported by TransUnion and is part of its ongoing series of quarterly analyses of credit-active U.S. consumers and how they are managing credit related to mortgages, credit cards and auto loans.

Viewed one quarter in arrears (to ensure the large majority of accounts are included in the data), new account originations increased 11.2% from 11.7 million in Q1 2014 to 13.1 million in Q1 2015. New account originations were largely driven by the subprime risk tier, which accounted for 18% of all account originations, up from 14.7% in Q1 2014.

Average credit card balances per borrower declined slightly from $5,234 in Q2 2014 to $5,199 in Q2 2015. The average balance increased 1.1% quarter-over-quarter, up from $5,142 in Q1 2015. Super Prime consumers (those consumers with a VantageScore® 3.0 credit score 780 or higher) experienced the largest average balance growth, up 1.4% from $2,316 in Q2 2014 to $2,349 in Q2 2015.

Q2 2015 Credit Card Statistics – Consumer-Level Delinquency Rates

Quarter over QuarterQ1 2015Q2 2015Pct. Change
Year over YearQ2 2014Q2 2015Pct. Change
Credit Card Consumer Delinquency Rates for Select StatesQ2 2015
New York1.25%
Largest Year-over-Year DeclinesQ2 2014Q2 2015Pct. Change
New Hampshire1.02%0.99%(3.7%)
Largest Year-over-Year IncreaseQ2 2014Q2 2015Pct. Change
North Dakota0.65%0.73%12.2%


Q2 2015 Credit Card Statistics – Credit Card Debt per Borrower

Quarter over QuarterQ1 2015Q2 2015Pct. Change
Year over YearQ2 2014Q2 201Pct. Change
Credit Card Debt per Borrower for Select StatesQ2 2015
New York$5,397
Largest Year-over-Year DeclinesQ2 2014Q2 2015Pct. Change
Largest Year-over-Year IncreasesQ2 2014Q2 2015Pct. Change
North Dakota$4,283$4,3220.9%
South Dakota$4,578$4,5900.3%


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