Credit Card Delinquencies Highest in Foreclosure Hit States

Gallery.creditcard1Credit card delinquencies in the third quarter fell 6 percent, compared to the previous quarter, according to an analysis by TransUnion, one of the three U.S. credit bureaus.
The highest delinquency rates were in Nevada (1.98 percent), followed closely by Florida (1.47 percent) and Arizona (1.35 percent). These are three out of the four states with the highest foreclosure rates. If you add California, the four states had 43 percent of all foreclosures started in the third quarter, according to the Mortgage Bankers Association. 
The national credit card delinquency rate, borrowers 90 days or more delinquent on one or more of their bank-issued credit cards, dropped to 1.10 percent in the third quarter of 2009, down 5.98 percent over the previous quarter. In the year-to-year comparison, however, credit card delinquencies remained flat from 1.09 percent in the third quarter  of 2008, TransUnion said.
The results are somewhat encouraging; however, credit card issuers reported in recent days higher 30-day delinquencies for October.
Average credit card borrower debt, the total owed on all bank-issued credit cards for an individual, inched downward nationally 1.87 percent to $5,612 from the previous quarter’s $5,719, and down 1.71 percent to $5,710,  compared to the third quarter of 2008.
TransUnion reported that third quarter delinquency rates showed a decrease from the previous quarter for the first time in ten years, “indicating a departure from the usual seasonal patterns.”
“The national savings rate fell in the third quarter, possibly indicating continued consumer efforts to keep debt to  a minimum and debt repayment under control in the face of an already depressed labor market,” Ezra Becker, director of consulting and strategy in TransUnion’s financial services group.
Becker also indicated that actions taken by major credit card issuers, including raising interest rates, lowering credit limits and closing under-used accounts also had an impact on the lower delinquency rate.
“This recession has taught the U.S. consumer many lessons: shop around for the best deal, maximize the value of your spend and protect your day-to-day liquidity,” Becker said.
TransUnion’s analysis is taken quarterly from about 27 million anonymous, randomly sampled credit files, representing about 10 percent of credit-active U.S. consumers.
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