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

TransUnion, a company creating advantages for millions of people around the world by gathering, analyzing and delivering information, has released its quarterly analyses of credit-active U.S. consumers, after evaluating their credit management series related to mortgages, credit cards and auto loans.

As per the new report, the national credit card delinquency rate has jumped slightly to 0.75 percent in Q3 2012 from 0.71 percent in Q3 2011. This rate was as slow as 0.63 percent in Q2 2012 – a seasonal record low.

Ezra Becker, vice president of research and consulting in TransUnion’s financial services business unit, said the credit card delinquencies are following a pattern similar to what they observed in 2011, with declines in the first two quarters of the year followed by an increase in the third.

"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," Becker added.

The new report also suggests the new credit card originations have achieved 3.14 percent in Q2 2012 compared to Q2 2011, and the share of non-prime, higher-risk originations was 29.55 percent in the second quarter of the year, slightly higher than one year ago (29.28 percent in Q2 2011), and much higher than the 23.86 percent observed in Q2 2010.

Thirty-six states in the U.S. have experienced rises in their credit card delinquency rates year over year, whereas nine states and the District of Columbia saw the declining trend. But this was not the case with California and Nevada, as these two states suffered a hit by the recession and saw a downtrend in their card delinquency rates.

"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,” said Becker, “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."

Officials at TransUnion say that this forecast is based on seasonality effects and other economic factors such as anticipated gross state product, consumer sentiment, disposable income and employment conditions.

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