TransUnion: Average Credit Card Debt Still Slipping

Saving moneyWith stricter credit card laws taking effect this week, there’s even more bad news for card issuers.
The average credit card debt continued its slide in the fourth quarter 2009, down to $5,434, a 3.18 percent dip from the previous quarter and down 5 percent from a year ago, reported TransUnion.
The credit bureau also reported that the national credit card delinquency rate, the ratio of card borrowers 90 days late, increased to 1.21 percent in the fourth quarter, up 10 percent from the previous quarter, but remained flat year over year. But the increase was in line with typical holiday season expectations.
The states with the highest delinquency rates were those hit hard by the foreclosure crisis: Nevada (2.00 percent), followed closely by Florida (1.75 percent) and Arizona (1.62 percent).
The downward slide in the average credit card debit mirrors figures released by the Federal Reserve. Revolving credit, or credit card balances, fell $8.5 billion, or 11.7 percent, to $866 billion in December, the 15th-consecutive monthly decline, the Fed reported.
“The drop in credit card balances in the fourth quarter is due in part to the efforts of consumers to pay down their credit cards in response to continued financial uncertainty; they want to keep a credit cushion available for hard times, which unfortunately are faced by many consumers these days,” said Ezra Becker, director of consulting and strategy in TransUnion’s financial services business unit. “However, we do expect to see the increased balances due to holiday spending show up on credit files in the month of January.”
TransUnion forecasts moderate GDP growth throughout 2010 and sees the 90-day credit card delinquency rate for this year “fluctuating up and down within nominal ranges,” Becker said.
Becker said the delinquency rate should be below 1.2 by the end of the year.
The source for TransUnion’s analysis is its database of 27 million anonymous consumer records randomly sampled every quarter.

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