Credit Card Delinquency Lowest It’s Been in 15 Years

TransUnion, one of the three major credit reporting agencies, released their quarterly study on credit card delinquency for first quarter 2011 on May 23, 2011.  Delinquency was defined as credit card accounts that were past due 90 days or more.  This study revealed that the credit card delinquency rate for Q1 2011 was .74%; the lowest rate since Q3 1996 which was .76%.  The Q1 2011 rate was a 10% decrease from Q4 2010, (.82%) and a 33% decrease from one year earlier.

Average credit card balance

The average credit card debt for consumers carrying a balance was $4,679 in Q1 2011, which was a 5.8% decrease from Q4 2010 or $4,965. This was the lowest since Q3 2000 at $4,695 with the highest during the recession was in Q1 2009 at $5,776.

The states with the highest average credit card balances:

Alaska                       $6,811

North Carolina       $5,446

Hawaii                       $5,303

States with the lowest average credit card balances:

Iowa                          $3,649

North Dakota         $3,903

South Dakota         $3,970

No state had an increase in credit card debt from the previous quarter Q4 2010.  Those with the largest decrease were Tennessee (-17.2), D.C. (-9.9%) and Montana (-7.7%).

Delinquency rates

Delinquency rates decreased for 75% of the Metropolitan Statistical Areas in Q1 2011 compared to 50% in Q4 2010. The area with the biggest drop was Ames, IA (-52%) and the largest was Ithaca, NY (54%).

The states with the highest delinquency rates were:

Nevada        1.16%

Florida           1.04%

Mississippi      .92%

The states with the lowest delinquency rates were:

North Dakota         .36%

Alabama                  .46%

Vermont                   .48%

Key reasons

The key reasons for the changes in delinquencies and balances were:

• Lenders are still conservative in extending new credit.
• Consumers are paying their credit card bills before their mortgages.
• Consumers are placing an emphasis on paying off their credit card debt.
• Consumers are using credit cards less.

It is encouraging to see credit card debt being paid off and credit cards being used less. It will be interesting to see if this trend continues as card issuers begin to loosen up their credit policy, the economy improves and consumer confidence increases.

John Ulzheimer is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a Contributor for the National Foundation for Credit Counseling.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry.  Follow him on Twitter here.

Categorised in: Credit Cards, Credit Report, Credit Score, Debt, Money & Identity

This post was written by John Ulzheimer