November 27, 2009
-
News: TransUnion; CC Delinquencies Down
A TransUnion report indicated that Americans did a better job at paying their credit card bills on time during third quarter 2009. TransUnion is one of the top three U.S. credit reporting bureaus. According to the report, third quarter U.S. credit card delinquencies fell by 6 percent from second quarter. The three of the four states that suffered the greatest with home foreclosures, are also struggling with card delinquencies. Nevada had the highest delinquency rate increase at 1.98 percent. Florida was second in line with a 1.47 percent increase and Arizona came in third with a 1.35 percent increase. Although California was one of the top four states in home foreclosures, the state fared better with credit card delinquencies.
Overall, the nation's third quarter credit card delinquencies of 90 days or more fell to 1.10 percent which was 5.98 percent lower than second quarter. Another encouraging note is that this year's delinquency rate came very close to last year's 1.09 percent. Understanding the importance of knowing credit card delinquencies is realizing that they are a predictor of future card defaults. According to TransUnion, this was the first time in ten years that the nation saw a decrease in third quarter delinquency rates from second quarter numbers. Lenders have also played a role in delinquency decreases as most of the nation's top card companies slashed credit limits and closed high risk accounts.
The average credit card debt for third quarter also fell slightly by 1.87 percent to $5,612 down from the second quarter average of $5,719. Debt was also down 1.71 percent from the $5,710 average reported in third quarter 2008. Not so encouraging is the fact that Americans socked away less in savings for third quarter. The decrease could be a result of several events. In the wake of the highest unemployment rate in decades, consumers have had to rely on savings to cover expenses while in the unemployment lines. With signs of reduced card spending, consumers could be using savings to pay in cash and avoid high interest rates and fees.