TransUnion.com 1Q09 Card Delinquency Rates Up 9 Percent from Previous Quarter Year-Over-Year Delinquency Rate Continues to See Double-Digit Increase
Chicago, June 8, 2009 – TransUnion.com released today the results of its analysis of trends in the credit card lending industry for the first quarter of 2009. The report is part of an ongoing series of quarterly consumer lending sector analyses focusing on credit card, auto loan and mortgage data that may be found on TransUnion’s Web site. Information for this analysis is culled quarterly from approximately 27 million anonymous, individual credit files, providing a real-life perspective on how U.S. consumers are managing their credit health.
Average bankcard borrower debt (defined as the aggregate balance on all bank-issued credit cards for an individual bankcard borrower) inched upward nationally 0.82 percent to $5,776 from the previous quarter’s $5,729, and 4.09 percent compared to the first quarter of 2008 ($5,548). The highest state average bankcard debt remains in Alaska at $7,476, followed by Tennessee at $6,869 and Nevada at $6,677. The lowest average bankcard debt was found in Iowa ($4,300), followed by North Dakota ($4,414) and West Virginia ($4,640).
The steepest increases in average bankcard debt over the previous quarter occurred in Alabama (+5.6 percent), Mississippi (+5.4 percent) and Tennessee (+4.7 percent). The District of Columbia experienced the largest drop in average bankcard debt (-1.5 percent), followed by the Wyoming (-1.2 percent) and New Jersey (-1.1 percent).
Nationally, the bankcard delinquency rate (the ratio of bankcard borrowers 90 days or more delinquent on one or more of their bankcards) increased to 1.32 percent in the first quarter of 2009, up 9.1 percent over the previous quarter. Year over year, bankcard delinquencies increased 11 percent from 1.19 to 1.32 percent. Incidence of bank card delinquency was highest in Nevada (2.44 percent), followed closely by Florida (1.9 percent) and Arizona (1.68 percent). The lowest bank card delinquency incidence rates were found in North Dakota (0.73 percent), South Dakota (0.77 percent) and Alaska (0.77 percent). The District of Columbia saw a quarter-over-quarter drop of 11.8 percent in bank card delinquency.
“As expected, bankcard delinquencies increased in the first quarter both as a national average and in most areas of the country,” said Ezra Becker, director of consulting and strategy in TransUnion’s financial services group. “As the recession entered its sixth quarter, we saw continued increases in average bankcard balances, as consumers struggled to meet repayment obligations in a job market that continues to deteriorate. This increase could be an indication that tax refund checks, typically used to pay down balances during the first quarter in years past, are now being used to cover daily living expenses.
“At end of the 2001 recession, the national bankcard delinquency rate had increased to a high of 1.69 percent,” continued Becker. “As that recession came to a close (in November of 2001), three of the five riskiest areas of the country in terms of bankcard delinquency were to be found in the South: North Carolina, Georgia, and South Carolina. In the current recession, Las Vegas is leading in terms of bankcard delinquency (2.6 percent), but is followed closely by metropolitan areas within the state of Florida (Miami, 2.5 percent) and California (Stockton, 2.4 percent). This highlights one of the fundamental differences between the two recessions—the housing market. Today, the least risky metropolitan area is Bismarck, N.D. (with a credit card delinquency rate of 0.6 percent)—a position fairly consistent with what it held during the previous recession.”
TransUnion’s forecasting models have been quite predictive over the past few quarters, forecasting delinquency within 1.3 percent of actual rates. The current TransUnion forecast for the national 90-day bankcard delinquency rate is a continued rise throughout 2009, approaching 1.7 percent by year-end. Depending on the impact of various stimulus programs and the effects of unemployment, the bankcard delinquency rate’s upward climb could potentially taper off in early 2010, with a peak in late 2010 or early 2011 as increases in disposable income assist consumers with their repayment obligations. At the state level, Nevada is anticipated to experience the highest delinquency rate by the end of 2009 (2.95 percent), while Alaska is expected to show the lowest delinquency rate (0.96 percent). Of course, the impact the changes to credit card regulations and associated legislation, and the response of card lenders to those changes, will have on consumer behavior and hence delinquency rates is still unknown.
TransUnion’s Trend Data database
The source of the underlying data used for this analysis is TransUnion’s Trend Data, 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.