Some good and bad news from recent TransUnion analysis…
Results from ongoing quarterly consumer lending sector analyses that focuses on credit card, auto loan and mortgage trends, compiled by TransUnion for the second quarter of 2008, show a slight increase across the board geographically of credit card debt. National credit card debt per cardholder rose 2.63% from the previous quarter to $1,717 from $1,673, and 8.6 percent compared to the second quarter of 2007 ($1,581). Alaska has the highest average debt per cardholder ($2,494) followed by Tennessee ($2,109) and Alabama ($2,015). The state with the lowest average was Iowa ($1,281), North Dakota ($1,318) and South Dakota ($1,388).
Good news for credit card lenders is a continued decline in credit card delinquencies (the number of borrowers 90 days or more past due), dropping 12.6% to 1.04% over the previous quarter. The lowest delinquency rates were found in North Dakota (0.59 percent), Vermont (0.68 percent) and Utah (0.70 percent); the highest in Nevada (1.72 percent), followed closely by Florida (1.34 percent) and Mississippi (1.30 percent).
Ezra Becker, principal consultant in TransUnion’s financial services group, noted several reasons for the positive movement in the consumer lending sector. “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. 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.”
Becker also noted, “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.” The lower statistics may be an indication that consumers did in fact use their stimulus checks toward debt repayment. Four in ten respondents in a recent TransUnion survey indicated that was the case.
The national forecast by TransUnion of the national 90-day delinquency rate is that it will likely continue a downward slide next quarter; however, they predict only a 1.10% drop by year’s end. “Gas prices will continue to add to the overall financial burden on the consumer at least through the end of the summer. In conjunction with fall/winter holiday seasonality effects, this will contribute to an overall increase in delinquency through the fourth quarter,” Becker added.
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