05:01 AM

TransUnion: Credit Card Delinquency Rates, Balances Rise in Third Quarter

CHICAGO, IL--(Marketwire - Nov 19, 2012) - The national credit card delinquency rate (the ratio of borrowers 90 or more days past due) increased slightly to 0.75% in Q3 2012 from 0.71% in Q3 2011. This rate had been 0.63% in Q2 2012, a seasonal low.

Average credit card debt per borrower also increased on a yearly basis by 4.91%, rising to $4,996 in Q3 2012 from $4,762 in Q3 2011. On a quarterly basis, average credit card debt was up 0.50% relative to Q2.

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

"Credit card delinquencies are following a pattern similar to what we observed in 2011, with declines in the first two quarters of the year followed by an increase in the third," said Ezra Becker, vice president of research and consulting in TransUnion's financial services business unit. "That seasonal consistency is encouraging. Credit card debt trends in 2012 also are mirroring 2011, with a decrease in the first quarter followed by two increases over the next six months. With both delinquencies and debt levels remaining quite low relative to historical norms, we are confident in the continued stability of credit card usage patterns in the short term."

New credit card originations grew 3.14% in Q2 2012 relative to Q2 2011. The share of non-prime, higher-risk originations (with a VantageScore® credit score lower than 700 on a scale of 501-990) was 29.55% in the second quarter of the year, slightly higher than one year ago (29.28% in Q2 2011), and much higher than the 23.86% observed in Q2 2010. Credit card originations are analyzed one quarter in arrears, to account for the reporting lag of new accounts.

"Non-prime borrowers continue to gain more access to credit. In conjunction with the growth in the overall number of card originations in the last few years, it means that the credit card pie is bigger, and non-prime consumers are getting a bigger slice of that pie," said Becker. "It is possible that the slight increase in delinquencies year over year can be attributed in part to the increased share among non-prime borrowers of new accounts, but even so these delinquency numbers are not a cause for concern. We've found that consumers continue to value their credit cards more than ever, and will likely do so at least until unemployment further abates."

Thirty-six states saw increases in their credit card delinquency rates year over year, while nine states and the District of Columbia saw decreases. No changes were observed in five states. California and Nevada, two states hardest hit by the recession, continued to see decreases in their card delinquency rates.

On a more granular level, 64% of metropolitan statistical areas (MSAs) saw increases in their respective credit card delinquency rates in Q3 2012 relative to one year ago. This is only slightly higher than last quarter, when 62% of MSAs experienced a year-over-year increase.

Based on current economic assumptions, TransUnion forecasts credit card delinquencies to remain near present-day levels with potentially some seasonal fluctuations through the end of 2012. This forecast is based on seasonality effects and various other economic factors such as anticipated gross state product, consumer sentiment, disposable income, and employment conditions. The forecast changes as the economy deviates from a conservative economic forecast, if there are unanticipated shocks to the economy affecting recovery, or if lenders materially change their underwriting standards.

Q3 2012 Credit Card Statistics - Delinquency Rates   

Quarter over Quarter   Q2 2012     Q3 2012     Pct. Change  
USA   0.63 %   0.75 %   19.05 %

Year over year   Q3 2011     Q3 2012     Pct. Change  
USA   0.71 %   0.75 %   5.63 %

Highest Credit Card Delinquency States   Q3 2012  
Mississippi   1.16 %
West Virginia   1.06 %
Alabama   1.04 %
Louisiana   1.01 %

Lowest Credit Card Delinquency States   Q3 2012  
North Dakota   0.38 %
Minnesota and South Dakota   0.50 %
Montana   0.52 %

Top 3 Year-over-Year Increases   Q3 2011     Q3 2012     Pct. Change  
Massachusetts   0.63 %   0.92 %   46.03 %
West Virginia   0.85 %   1.06 %   24.71 %
Alaska   0.45 %   0.53 %   17.78 %

Top 3 Year-over-Year Declines   Q3 2011     Q3 2012     Pct. Change  
District of Columbia   0.73 %   0.57 %   (21.92 %)
Oregon   0.67 %   0.59 %   (11.94 %)
North Dakota   0.42 %   0.38 %   (9.52 %)

Q3 2012 Credit Card Statistics - Credit Card Debt Per Borrower

Quarter-over-Quarter   Q2 2012   Q3 2012   Pct. Change  
USA   $ 4,971   $ 4,996   0.50 %

Year-over-Year   Q3 2011   Q3 2012   Pct. Change  
USA   $ 4,762   $ 4,996   4.90 %

Highest Credit Card Debt States Q3 2012
Alaska $ 7,094
Colorado $ 5,696
Connecticut and North Carolina $ 5,634

Lowest Credit Card Debt States   Q3 2012
Iowa   $ 3,883
North Dakota   $ 3,978
South Dakota   $ 4,204
West Virginia   $ 4,319

Top 3 Year-over-Year Increases   Q3 2011   Q3 2012   Pct. Change  
New Jersey   $ 5,033   $ 5,560   10.46 %
New Mexico   $ 4,544   $ 4,992   9.86 %
Illinois   $ 4,738   $ 5,167   9.06 %

Top 3 Year-over-Year Declines   Q3 2011   Q3 2012   Pct. Change  
North Dakota   $ 4,078   $ 3,978   (2.45 %)
Idaho   $ 4,606   $ 4,535   (1.54 %)
Mississippi   $ 4,751   $ 4,693   (1.21 %)

Supporting Resources/Links

TransUnion Trend Data Interactive U.S. Map

TransUnion 2Q12 Credit Card Statistics

TransUnion Credit Monitoring Study

TransUnion Payment Hierarchy Study

TransUnion Deleveraging Analysis

TransUnion on Twitter

TransUnion's Trend Data database

TransUnion's Trend Data is a one-of-a-kind database consisting of 27 million anonymous consumer records randomly sampled every quarter from TransUnion's national consumer credit database. Each record contains more than 200 credit variables that illustrate consumer credit usage and performance. Since 1992, TransUnion has been aggregating this information at the county, Metropolitan Statistical Area (MSA), state and national levels. For the purpose of this analysis, the term "credit card" refers to those issued by banks.

About TransUnion

As a global leader in information and risk management, TransUnion creates advantages for millions of people around the world by gathering, analyzing and delivering information. For businesses, TransUnion helps improve efficiency, manage risk, reduce costs and increase revenue by delivering high quality data, and integrating advanced analytics and enhanced decision-making capabilities. For consumers, TransUnion provides the tools, resources and education to help manage their credit health and achieve their financial goals. Through these and other efforts, TransUnion is working to build stronger economies worldwide. Founded in 1968 and headquartered in Chicago, TransUnion reaches businesses and consumers in 25 countries around the world. For more information, visit www.transunion.com.