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TransUnion.com: Average Credit Card Delinquency Rates Decrease in All 50 States and D.C. From Previous Quarter
| Source: TransUnion
CHICAGO, IL--(Marketwire - August 25, 2009) - TransUnion.com released today the results of
its analysis of trends in the credit card lending industry for the second
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 available on TransUnion's Web site at
www.transunion.com/trenddata. Information for this analysis is culled
quarterly from approximately 27 million anonymous, randomly sampled,
individual credit files, representing approximately 10 percent of
credit-active U.S. consumers and providing a real-life perspective on how
they are managing their credit health.
Statistics
As TransUnion predicted last quarter, the national credit card delinquency rate (the ratio of
bankcard borrowers 90 days or more delinquent on one or more of their
credit cards) fell to 1.17 percent in the second quarter of 2009, down
11.36 percent over the previous quarter. Year over year, credit card
delinquencies increased 12.5 percent from 1.04 percent. Incidence of credit
card delinquency was highest in Nevada (2.19 percent), followed closely by
Florida (1.64 percent) and Arizona (1.52 percent). The lowest credit card
delinquency incidence rates were found in North Dakota (0.69 percent),
Alaska (0.71 percent) and South Dakota (0.77 percent). Kentucky saw the
largest quarter-over-quarter drop of 18.2 percent in credit card
delinquency. In fact, no state experienced a quarterly increase in
delinquency rates in the second quarter of 2009.
Average credit card borrower debt (defined as the aggregate balance on all
bank-issued credit cards for an individual bankcard borrower) drifted
downward nationally 0.98 percent to $5,719 from the previous quarter's
$5,776, but was up 1.74 percent compared to the second quarter of 2008
($5,621). The highest state average credit card debt remains in Alaska at
$7,665, followed by Tennessee at $7,054 and Nevada at $6,517. The lowest
average credit card debt was found in Iowa ($4,247), followed by North
Dakota ($4,417) and South Dakota ($4,633).
The steepest increases in average credit card debt over the previous
quarter occurred in the District of Columbia (+6.3 percent), Tennessee
(+2.7 percent) and Alaska (+2.5 percent). Hawaii experienced the largest
drop in average credit card debt (-2.7 percent), followed by the Utah (-2.6
percent) and Nevada (-2.4 percent).
Analysis
"The second quarter of 2009 has marked the first time we have seen a drop
in the credit card delinquency rate over the past year. However, in looking
at the historical trends back to the beginning of 1999, we observe that the
credit card delinquency rate routinely drops after the first quarter --
something that occurs 80 percent of the time. A clear indicator of seasonal
patterns in consumer credit dynamics, the same across-the-board reduction
in delinquency rates at the state level was also observed in the second
quarter of 2008," said Ezra Becker, director of consulting and strategy in
TransUnion's financial services group. "Therefore, the recent change in
delinquency may be more the result of seasonal fluctuations rather than a
marked turnaround in nonpayment credit card behavior. In any event, credit
card delinquency remains well within historical norms and is not a cause
for significant concern at this time.
"The hot topic for most card lenders is no longer the impact of the
recession on consumer behavior, but rather the impact of the
recently enacted Credit Card Reform Act on the ability of card issuers
to maintain profitability, the changes to their strategies required by the
Act and the consequent changes in consumer behavior as a result of those
new strategies -- all of which are still largely unknown. This is where the
focus of lender scrutiny and effort will be over the next several months,
as they work to achieve compliance with the Act and provide competitive,
profitable card products to consumers in what will be a dramatically
different lending environment."
Forecast
"Although the recent decline in credit card delinquency rates may be
seasonally driven, from a forecasting perspective TransUnion is seeing
marginal improvement on the economic front. Recent data on the unemployment
rate (dropping to 9.4 percent in July) gives some credence to the idea that
we may have hit the bottom of the recession, impacting not only the equity
markets, but also consumer confidence. Therefore, TransUnion has revised
its forecasts for the 90-day credit card delinquency rate to just over 1.2
percent nationally by year-end. If the unemployment numbers remain true to
form over the next two quarters and the stock market continues to rise, we
could see delinquencies begin to drop near the beginning of 2010,"
continued Becker.
At the state level, Nevada is still expected to experience the highest
delinquency rate by the end of 2009 (2.25 percent), while Alaska is
anticipated to show the lowest delinquency rate (0.73 percent).
(Related Graphs: http://transunion.mediaroom.com/index.php?s=98)
(MP3 File Sound bites: http://transunion.mediaroom.com/index.php?s=102)
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. For the
purpose of this analysis, the term "credit card" refers to those issued by
banks.
About TransUnion
As a global leader in credit and information 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
comprehensive data and advanced analytics and decisioning. 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 employs associates
in more than 25 countries on five continents. www.transunion.com/business
Graphics and/or photographs to accompany this release can be obtained by
members of the media by contacting Cliff O'Neal at 312-985-2540 or
coneal@transunion.com or Dave Blumberg at 312-985-3059 or
dblumbe@transunion.com.