Consumers lowered the credit card balances on average almost 11 percent over the past 12 months, and fewer were late on their payments in the first quarter, pushing down the 90-day delinquency rate nearly 16 percent over a year ago, TransUnion said today. The quarterly analysis of credit card trends based on 27 million anonymously sampled credit files shows that Americans continue to reduce card balances through economic hard times, possibly helped along by credit card reform that took effect Feb. 22.
“TransUnion believes that the 90-day credit card delinquency rate, apart from seasonal ups and downs, will likely continue to decrease in 2010, possibly dropping below 1.0 percent by year end,” said Ezra Becker, director of consulting and strategy in TransUnion’s financial services business unit.
The delinquency rate was at 1.11 percent for the first quarter, the credit reporting agency said.
The new laws make it somewhat easier for consumers to pay down their debt because credit card issuers are prohibited from hiking interest rates on existing balances – the most significant protection offered by the Credit CARD Act of 2009.
TransUnion’s results reflect similar findings from the Federal Reserve’s consumer credit summaries for the first three months of the year. The Fed reports that revolving credit, mostly credit card balances, has decreased each month of this year, and has declined for 17 out of the last 18 months.
Average credit card debt – the aggregate balance on all bank-issued credit cards for an individual bankcard borrower – drifted downward for the fourth consecutive quarter by 4.95 percent to $5,165, from the previous quarter’s $5,434.
Average card debt has declined 10.57 percent compared to the first quarter of 2009, when it was at $5,776.
The ratio of bankcard borrowers 90 days or more delinquent on one or more of their credit cards decreased to 1.11 percent in the first quarter of 2010, down 8.3 percent over the previous quarter. Credit card delinquencies fell by 15.91 percent from a year ago.
The states with the highest credit card delinquencies are also some of the hardest hit by the foreclosure crisis: Nevada (1.79 percent); Florida (1.59 percent); and Arizona (1.40 percent).
