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TransUnion: Credit Card Originations up While Delinquency Rates, Balances Remain Near Record Lows

CHICAGO, IL--(Marketwire - Aug 14, 2012) - The national credit card delinquency rate (the ratio of borrowers 90 or more days past due) dropped to 0.63% in Q2 2012 from 0.73% the previous quarter. The credit card delinquency rate is at its lowest level since reaching 0.60% one year ago in Q2 2011. Prior to that, the last time the credit card delinquency rate was below its current level was in Q4 1994 (0.61%).

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.

"The national credit card delinquency rate continues to remain at the lowest levels we've observed in 18 years," said Ezra Becker, vice president of research and consulting in TransUnion's financial services business unit. "It's a positive situation because average borrower balances have increased over the past year as new card originations have grown. These low delinquency rates reflect both continued conservatism in lender underwriting and the ongoing prioritization of card payments among consumers."

Average credit card debt per borrower increased over the past year, moving up from $4,699 in Q2 2011 to $4,971 in Q2 2012. However, credit card debt continues to remain relatively low, more than $700 lower than just three years ago ($5,719 in Q2 2009).

Total card originations in Q2 2012 grew by approximately 4% relative to the same period last year. The share of non-prime, higher-risk consumers (with a VantageScore® credit score lower than 700 on a scale of 501-990) was 26.1%. This is slightly lower than one year ago (27.0% in Q2 2011), but still much higher than the 20.6% observed in Q2 2010. 

"While non-prime borrowers made up a slightly smaller percentage of all new trades in this latest quarter, they 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. "This is important to note, because one would think delinquencies would rise as non-prime borrowers gain more access to credit. We've found that consumers continue to value their credit cards more than ever and will likely do so at least until unemployment abates."

Only five states saw increases in their credit card delinquency rates quarter over quarter. On a more granular level, 20% of metropolitan statistical areas (MSAs) saw increases in their respective credit card delinquency rates in Q2 2012. This was down compared to last quarter, when 28% of MSAs experienced an increase.

Based on current economic assumptions, TransUnion is maintaining previous forecasts for credit card delinquencies to remain near current 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.

Q2 2012 Credit Card Statistics - Delinquency Rates

Quarter over Quarter  Q1 2012 Q2 2012 Pct. Change 
USA 0.73% 0.63% (13.70%)

Year over year Q2 2011 Q2 2012 Pct. Change
USA 0.60% 0.63% 5.00%

Highest Credit Card Delinquency States Q2 2012    
Mississippi 0.97%    
Nevada 0.89%    
Alabama 0.84%    
Georgia & West Virginia 0.82%    

Lowest Credit Card Delinquency States  Q2 2012    
North Dakota 0.36%    
South Dakota 0.42%    
Montana 0.43%    
Nebraska 0.44%    

Top 3 Year-over-Year Increases  Q2 2011  Q2 2012 Pct. Change
Massachusetts 0.51% 0.71% 39.22%
Mississippi 0.75% 0.97% 29.33%
West Virginia 0.64% 0.82% 28.13%

Top 3 Year-over-Year Declines  Q2 2011 Q2 2012 Pct. Change
Montana 0.48% 0.43% (10.42%)
North Dakota 0.40% 0.36% (10.00%)
Utah 0.52% 0.47% (9.62%)

Q2 2012 Credit Card Statistics - Credit Card Debt Per Borrower

Quarter-over-Quarter  Q1 2012 Q2 2012 Pct. Change
USA $4,962 $4,971 0.17%

Year-over-Year Q2 2011 Q2 2012 Pct. Change
USA $4,699 $4,971 5.79%

Highest Credit Card Debt States Q2 2012    
Alaska $7,045    
Colorado $5,728    
North Carolina $5,619    
Connecticut $5,532    

Lowest Credit Card Debt States  Q2 2012    
Iowa $3,874    
North Dakota $4,006    
Wisconsin $4,252    
South Dakota $4,257    

Top 3 Year-over-Year Increases  Q2 2011 Q2 2012 Pct. Change
District of Columbia $4,700 $5,406 15.01%
Vermont $4,210 $4,742 12.63%
New Jersey $4,935 $5,471 10.87%

Top 3 Year-over-Year Declines  Q2 2011 Q2 2012 Pct. Change
Mississippi $4,890 $4,629 (5.34%)
Tennessee $4,685 $4,680 (0.12%)

*Note: No other states experienced year-over-year declines

Supporting Resources/Links

TransUnion Trend Data Interactive U.S. Map

TransUnion 1Q12 Credit Card Statistics

TransUnion Deleveraging Analysis

TransUnion Mortgage Loan Modification Study

TransUnion Payment Hierarchy Study

TransUnion Life After Foreclosure Study

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.