Research and Statistics

Credit card debt up, delinquencies down in Q2, report says


Americans had more average credit card debt and delinquencies were down slightly during the second quarter of 2008, says credit bureau TransUnion.

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Credit card debt inched up during the second quarter of 2008 while delinquencies took a slight dip, according to data released Tuesday by TransUnion.

The national consumer credit reporting agency’s quarterly review of credit spending and payment habits shows credit card debt rose slightly across the country in Q2. Overall, national credit card debt per credit card borrower increased 2.63 percent to $1,717 — up from $1,673 in Q1 and up by 8.6 percent from 2007’s second quarter level of $1,581.

Alaskans charge the most

Alaska had the highest state average with $2,494 in card debt per borrower, followed by Tennessee ($2,109) and Alabama ($2,015). The states with the lowest average debt per borrower were Iowa ($1,281), North Dakota ($1,318) and South Dakota ($1,388).

The states and areas with the highest increases in card debt were the District of Columbia, which logged a 6.62 percent increase, followed by Alaska (4.84 percent) and Tennessee (4.75 percent). States with the smallest increases in average credit card debt included Alabama (0.49 percent), North Carolina (0.73 percent) and West Virginia (0.82 percent).

Delinquencies — defined as the ratio of borrowers 90 days or more past due on one or more of their credit card accounts — were 1.04 percent in Q2. That is down by 12.6 percent from Q1 but up by 14.3 percent from the same time period in 2007. A separate report by the American Bankers Association found that Q2 credit card delinquencies were up slightly. The ABA measures the number of credit card debtors who are 30 days late, and it found that percentage had bumped up to 4.54 percent.

Delinquency rates were highest Nevada and Florida — two states hit hard by the recent mortgage foreclosure crisis. In Nevada 1.72 percent of credit card users were more than three months late on their accounts, while 1.34 percent of Florida card users were late. Mississippi ranked third in delinquencies with a 1.30 percent rate. North Dakotans had the best payment rates; only 0.59 percent of card users in that state were more than 90 days late. Vermont ranked second with 0.68 percent and Utah was next with a 0.70 percent delinquency rate.

“A number of factors may be in play that could explain the recent downward trend in the national bank card delinquency rates,” TransUnion spokesman Ezra Becker  said in a press release. “First, the Federal Reserve Board’s Senior Loan Officer Opinion Survey on Bank Lending Practices (updated August 11, 2008) shows that many financial services institutions have tightened their consumer lending policies in 2008 relative to where they were in at the same time last year, the effects of which are now becoming increasingly apparent in delinquency statistics.”

He adds: “From the consumer side, the improvement in median household income over the quarter allowed consumers to make further inroads into paying off past-due debt … “The IRS has reported that consumers had been filing income tax returns earlier this year; the benefit of early tax refunds as a result of early filings can in part be seen in these improved credit card delinquency statistics in the second quarter.”

Becker says the 90-delinquency rate may continue to decline in Q3, but will likely end the year at 1.10 percent because of holiday and winter seasonal spending.

The TransUnion analysis is based on data collected from 27 million consumer records from the credit reporting agency’s database. The records were randomly sampled and anonymous.

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See related:Credit card issuers sharply tighten lending standards

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