Bankruptcy and credit card delinquency statistics
By Jamie Gonzalez-Garcia | Updated: May 18, 2017
The health of the credit card industry is best measured not by the number of people with cards, but rather the number who pay their bills. Bad payment habits can lead to more fees, lower credit scores and, in some cases, bankruptcy.
The good news for consumers is that bankruptcies are down. About 204,000 consumers had a bankruptcy notation added to their credit reports in the fourth quarter of 2016, 4 percent fewer than in the same quarter 2015 and a new series low.2
There were 781,123 total nonbusiness bankruptcy filings in 2016, down 6.5 percent from the year before. Among businesses, there were 24,457 bankruptcy filings in 2016, down 2.1 percent from 2015.3
Unlike bankruptcies, credit card defaults are up slightly or about the same, depending on which numbers you look at. Delinquencies in closed-end loans and bank cards rose in the third quarter of 2016, but remain near historical lows, according to the American Bankers Association’s Consumer Credit Delinquency Bulletin.
Bank card delinquencies increased 26 basis points to 2.74 percent of all accounts in the third quarter, but remain well below their 15-year average of 3.68 percent. The ABA report defines a delinquency as a late payment that is 30 days or more overdue.4
The trend looks similar when examining accounts that have been overdue for three months. TransUnion's Industry Insights Report found that the credit card delinquency rate reached 1.79 percent in Q4 2016, an increase of 12.6 percent from 1.59 percent in Q4 2015. The credit card delinquency rate remains more than a full point below its peak in Q4 2009 (2.97 percent).5
The Federal Reserve Bank of New York measures credit card delinquencies slightly differently. It looks at the percent of balances that are at least 90 days late. For the final quarter of 2016, that rate was 7.1 percent, unchanged from the previous quarter.2
However, charge-offs, another indicator of credit risk, are up. A charge-off occurs when a card issuer gives up on collecting a particular debt. The charge-off rate on credit card loans from the top 100 banks was 3.33 percent in the fourth quarter of 2016, up from 2.92 percent the year before.6
Some demographic groups are more likely than others to miss bill payments. Generally, the younger the consumer group, the higher their delinquency rates, with those under 40 years old seeing a slight increase in their delinquency rates between Q3 2014 and Q3 2015.8
|90+ day credit card delinquency rates for various age groups|
|Age range||Q3 2014||Q3 2015|
Perhaps it's not surprising then that among college students, 13 percent said they were “constantly or frequently stressed” about credit card payments.7 About 15 percent of college students who own a credit card said they frequently charge purchases without having the funds to pay the bill.
However, the majority of card-holding students never or rarely do this, and 63 percent say they pay their balance in full each month. Only 8 percent of students pay only the minimum each month, and less than 1 percent pay less than the minimum.9
Certain states tend to have higher delinquency rates than others, too. According to TransUnion's data from the fourth quarter of 2016, Mississippi had the highest credit card delinquency rate and Wisconsin had the lowest.5
|States with highest credit card delinquency rates, Q4 2016|
|States with lowest credit card delinquency rates, Q4 2016|
Collection agencies work on behalf of lenders and third-party debt collectors to reclaim past-due debts. But fewer people are getting calls from collectors. In the first quarter of 2015, 13.6 percent of consumers had one or more debts in collections. That's up slightly from the fourth quarter of 2014, but lower than any other period since the fourth quarter of 2008. The average amount they owed – $1,376 – was the lowest mark since the fourth quarter of 2010.1
Some studies also show that credit card debt may not be collectors' top priority. In 2015, 35.6 percent of collection agencies reported collecting credit card debt, less than the 64.4 percent of collection agencies that collect health care debt.10
In its March 2017 report, the U.S. Consumer Financial Protection Bureau reported that debt collection made up 21 percent of all complaints received in 2016.11
- Federal Reserve Bank of New York Quarterly Report on
Household Debt and Credit, May 2015
- Federal Reserve Bank of New York Quarterly Report on Household Debt and Credit, February 2017
- U.S. Bankruptcy Courts
- American Bankers Association, January 10, 2017
- TransUnion Industry Insights Report Q4 2016
- Federal Reserve Charge-Off and Delinquency Rates on Loans and Leases at Commercial Banks
- Sallie Mae’s “How America Pays for College” 2016
- TransUnion Industry Insights Report Q3 2015
- Sallie Mae’s “Majoring in Money: How American College Students Manage Their Finances” 2016
- BillingTree's 2015 Collection Agency Operations and Technology Survey
- U.S. Consumer Financial Protection Bureau
See related: Credit card statistics
- Cash advance survey 2017: Read fine print before seeking quick cash – A review of 100 credit card cash advance policies found cash advance transactions can quickly consume an available credit line with fees, high interest charges, among other undesirable terms ...
- Household debt passes pre-recession peak, NY Fed finds – U.S. household debt has surpassed its pre-recession peak for the first time, says new data from the New York Fed. Economists say milestone doesn't mean consumers are over-leveraged ...
- Poll: Credit card fraud alerts surge, false alarms still common – Consumers report a 15 percent increase in contacts from banks about credit, debit card fraud ...