Credit card debt, delinquency up in last quarter of 2014

Numbers still lower than historical norms

George Ford
Published: February 18 2014 | 3:24 pm - Updated: 29 March 2014 | 3:50 am in
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Americans took on more credit card debt in the final three months of 2013 and more people failed to make timely monthly payments, according to Chicago-based TransUnion.

Average credit card debt per borrower increased to $5,376 in the quarter that ended on Dec. 31 from $5,235 in the previous quarter. Average credit card debt per borrower declined from $5,376 in the final quarter 2012.

The delinquency rate (the ratio of borrowers 90 days or more delinquent on their general purpose credit cards) rose to 1.48 percent in the fourth quarter of 2013 from 1.36 percent in the third quarter. The delinquency rate dropped from 1.61 percent in the fourth quarter of 2012.

The report is based on anonymous credit data from virtually every credit-active consumer in the United States.

Ezra Becker, vice president of research and consulting in TransUnion's financial services business unit, said credit card delinquencies continue to be much lower than historical norms.

"We also believe that there is a continuing reduced demand for new credit," Becker said. "While industry reports show that direct mail has increased by about 30 percent in the last year, we have seen credit card originations only rise about 11 percent.

"Consumers are managing the cards they have in their wallets effectively and do not seem to be seeking additional card credit at this point."

Every state experienced a decline in credit card delinquency between the fourth quarter of 2012 and the same quarter of 2013. The largest delinquency declines occurred in Massachusetts, Rhode Island, Wisconsin and Oregon.

Credit card debt per borrower increased in only seven states on a year-over-year  basis.

TransUnion reported 341.40 million credit card accounts as of the final quarter 2013, up from 329.48 million in the same quarter of 2012.

"At first glance, the increased number of credit card accounts and new account originations appear to be quite positive. However, there are still at least 40 million fewer credit card accounts active in the marketplace than what we observed just five years ago," Becker said.

TransUnion is forecasting consumer delinquencies to rise to approximately 1.57 percent by the end of the first quarter of 2014, which remains a relatively low level. The company said the forecast will change if there were unanticipated shocks to the economy.

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