CHICAGO, Sept. 16 /PRNewswire/ -- TransUnion.com released today the
results of its analysis of trends in the credit card lending industry for the
second quarter of 2008. The report is part of an ongoing series of quarterly
consumer lending sector analyses focusing on credit card, auto loan and
mortgage data that may be found on TransUnion's Web site.
Statistics
The recent first-quarter drop in average credit card debt was temporary,
as data from second quarter 2008 shows a slight increase across the board
geographically. National credit card debt per credit card borrower increased
2.63 percent to $1,717 from the previous quarter's $1,673, and 8.6 percent
compared to the second quarter of 2007 ($1,581). The highest state average
card debt per credit card borrower was in Alaska at $2,494, followed by
Tennessee at $2,109 and Alabama at $2,015. The lowest average credit card
debt per credit card borrower was found in Iowa
($1,281), followed by North
Dakota
($1,318) and South Dakota
($1,388).
The steepest increases in average credit card debt over the previous
quarter occurred in the District of Columbia (6.62 percent), Alaska
(4.84 percent) and Tennessee (4.75 percent). Alabama experienced the smallest
increase in its average credit card debt (0.49 percent), followed by North
Carolina (0.73 percent) and West Virginia (0.82 percent).
On a positive note, the national credit card delinquency incidence rate
(the ratio of borrowers 90 or more days past due) continued to decline for the
second quarter in a row.
Nationally, the ratio of credit card borrowers delinquent on one or more
of their credit cards declined to 1.04 percent in the second quarter of 2008,
down 12.6 percent over the previous quarter. However, on a year-over-year
basis the national delinquency incidence rate has risen 14.3 percent from 0.91
percent in the second quarter of 2007. Incidence of delinquency was highest
in Nevada (1.72 percent), followed closely by Florida (1.34 percent) and
Mississippi (1.30 percent). The lowest credit card delinquency incidence
rates were found in North Dakota (0.59 percent), Vermont (0.68 percent) and
Utah (0.70 percent). Quarter-over-quarter delinquency incidence rates dropped
across the board. Nevada experienced the smallest drop in delinquency
(-1.15 percent), while the District of Columbia's delinquency incidence rate
dropped the most (-28.2 percent) from the previous quarter.
Analysis
"A number of factors may be in play that could explain the recent downward
trend in the national bankcard delinquency rates," said Ezra Becker, principal
consultant in TransUnion's financial services group. "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," added Becker. "Furthermore, 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."
According to a February consumer survey by TransUnion's TrueCredit.com,
more than four in ten respondents (42 percent) said they would pay down debt
with the rebate, while 20 percent indicated they would save the money and
16 percent stated would buy something they consider necessary. Only five
percent said they would splurge. "The lower delinquency statistics indicate
that many consumers did in fact use their economic stimulus checks, in part,
to pay down past-due credit card debt. However, with most 'big-box' stores
meeting or exceeding financial analyst expectations during the quarter, and
considering the increase in credit card balance statistics over the quarter,
it seems that a significant portion of those rebates did indeed find their way
back into the economy," continued Becker.
Forecast
TransUnion forecasts the national 90-day delinquency rate may likely
continue its downward slide next quarter; however, it is predicted to be at
1.10 percent 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.
As for state projections, Nevada (1.8 percent) is still anticipated to
experience the highest average delinquency rate by the end of 2008, while
North Dakota is expected to show the lowest level of delinquency
(0.6 percent).
TransUnion's Trend Data database
The source of the underlying data used for this analysis is TransUnion's
Trend Data, a one-of-a-kind database consisting of 27 million anonymous
consumer records randomly sampled every quarter from TransUnion's national
consumer credit database. Each record contains more than 200 credit variables
that illustrate consumer credit usage and performance. Since 1992, TransUnion
has been aggregating this information at the county, Metropolitan Statistical
Area (MSA), state and national levels.
About TransUnion
As a global leader in credit and information management, TransUnion
creates advantages for millions of people around the world by gathering,
analyzing and delivering information. For businesses, TransUnion helps
improve efficiency, manage risk, reduce costs and increase revenue by
delivering comprehensive data and advanced analytics and decisioning. For
consumers, TransUnion provides the tools, resources and education to help
manage their credit health and achieve their financial goals. Through these
and other efforts, TransUnion is working to build stronger economies
worldwide. Founded in 1968 and headquartered in Chicago, TransUnion employs
more than 3,600 employees in more than 25 countries on five continents.
http://www.transunion.com
.
SOURCE TransUnion
CONTACT: Dave Blumberg of TransUnion, +1-312-985-3059,
dblumbe@transunion.com
