TransUnion: Credit Card Balances Reach Highest Levels Since 2008; Delinquency Rate Remains Stable

The latest TransUnion Industry Insights Report found that the credit card delinquency rate remained steady in Q4 relative to the same period in 2013, and total outstanding credit card balances increased 5% on a yearly basis. The increase indicates record growth, the highest yearly growth observed since 2008.

On a quarterly basis, total outstanding balances grew 3.4% from Q3 2014, which is expected as the country entered the holiday season. Significant growth rates in the total number of consumers with a balance in the subprime (8%) and near prime (5.1%) credit tiers contributed to the growth of balances from a year-over-year perspective.

The report found that the national credit card delinquency rate (the ratio of borrowers 90 days or more delinquent with their general purpose credit cards) remained steady in the last year, hitting 1.47% in Q4 2014 compared to 1.48% in Q4 2013.

New entrants into the credit card market also impacted total balances. The number of consumers with access to credit grew to 157 million in Q4 2014, an increase of nearly 7 million from Q4 2013. However, the average credit card balance per consumer remained flat, declining only $3 from $5,330 in Q4 2013 to $5,327 in Q4 2014.

“On the heels of a strong holiday shopping season, our data show that consumers are charging more of their purchases, a positive sign for the credit card industry,” said Nidhi Verma, director of research and consulting in TransUnion’s financial services business unit. “With a stabilized delinquency environment reflected by essentially the same delinquency rate as in Q4 2013, credit card balance growth generally reflects a healthy market with more consumers gaining access to credit—and using that credit to make purchases.”

Delinquency rates for consumers 40 and over remained below the national average in Q4. The youngest age group (consumers under 30) experienced the only increase in yearly delinquency rates, up from 2.17% in Q4 2013 to 2.25% in Q4 2014, a 3.7% yearly increase. The youngest consumer group also maintained the lowest average balance ($2,234), while the 50 to 59 age group maintained the highest average balance ($6,917).

90+ Day Credit Card Delinquency Rates for Various Age Groups

The delinquency rates in the majority of the nation’s largest metropolitan areas continue to decline at a greater pace than the rest of the country, with Boston (-8.3%), Miami (-5.7%) and San Francisco (-5.5%) experiencing the largest yearly declines. Only two of major metropolitan areas experienced an increase in their yearly delinquency rate: Philadelphia (+0.3%) and Atlanta (+1.6%).

In Q4 2014, 21 states experienced yearly increases in their delinquency rates, led by Mississippi (10.6%), Iowa (7.1%) and West Virginia (6.5%). Alaska experienced the largest yearly decline (-13.7%), followed by Massachusetts (-7.4%) and Washington (-5.1%). “Card delinquency remains well controlled across the board,” said Verma. “Even in areas where delinquency increased year-over-year, the rates still remain well below historical averages.”

TransUnion reported 358.1 million credit card accounts as of Q4 2014, up from 340.7 million in Q4 2013. Viewed one quarter in arrears (to ensure all accounts are included in the data), new account originations increased 20.2% to 14.4 million in Q3 2014, up from 13.5 million in Q3 2013. The non-prime population (those with a VantageScore® 3.0 credit score lower than 661) continues to comprise a larger share of the new originations. Non-prime originations grew from 32% in Q3 2013 to 37% of originations in Q3 2014.

“The growth in originations for Q3 2014 indicates consumers in all credit tiers continue to receive more access to credit,” said Verma. “While non-prime originations have increased, the average credit line for non-prime consumers is shrinking, indicating strong risk management efforts from lenders. More consumers have access to card credit and are using that credit. Moreover, the vast majority of these borrowers are managing their cards well. In all, these factors point to a healthy, well-functioning card credit marketplace.”

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.

Q4 2014 Credit Card Statistics – Consumer-Level Delinquency Rates

Q3 2014 Credit Card Statistics -- Credit Card Debt per Borrower