June 10, 2009
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News: TransUnion Reports on 1st Qtr
The nation's largest credit reporting bureau, TransUnion released its report on credit card delinquencies for the first quarter of 2009. According to their report, credit card delinquencies of 90 days or more rose 11% to 1.32%. Additionally, consumers' average card debt rose in first quarter to $5,776 up from $5,548 same period last year. However, holiday retail sales which generally account for an increase in first quarter debt were down. This would indicate that consumers spent less on holiday gifts and more on necessities. Despite the rise in credit card delinquencies, they still remain much lower than mortgage delinquencies which were at 5.22%. Mortgage delinquencies are measured at 60 days rather than at 90 days because mortgage payments are much higher and not as easy to bring current.
The TransUnion report indicated that both credit card and mortgage delinquencies are the highest in Nevada, Florida, Arizona, and California. States with the lowest delinquencies were North Dakota, South Dakota, and Alaska. TransUnion data also showed that banks issued fewer cards for first quarter as new accounts plummeted by 49%. The trend reflects the fact that banks reduced the amount of available credit and consumers have reduced spending while relying less on their credit cards. Consumer credit scores reflect the increase in delinquencies as the average score dropped 6 points to 651. Hardest hit was Arizona with an 11 point drop and California with a 10 point drop.
The report does not see delinquencies trending down until sometime next year and expects the rate to eventually reach 1.7% by the end of the year. Many Americans are looking for President Obama's economic stimulus program to strengthen the weaken economy and lower the unemployment rate. There's also the new credit card reform bill that was recently signed by the President that is aimed at helping consumers get back on track with reducing their debt. Experts say it will not be until late 2010 before the country is stable again.