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TransUnion: credit card debt, delinquency declined in Q1

Jeremy Simon

In the first three months of this year, both credit card debt and credit card delinquency fell, according to the latest quarterly credit card analysis from TransUnion. The major credit bureau is in an ideal place to spot credit card trends becuase it maintains a massive database of consumer debt records.

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“For the first time since the beginning of 2007, average credit card debt and national credit card loan delinquency (the ratio of borrowers 90 or more days past due) experienced statistically relevant quarterly declines,” TransUnion says in a press release.

According to Ezra Becker, principal consultant in the financial services group at TransUnion, the change was significant because it reversed recent trends. Over the past five years, the average credit card delinquency increased by about 11 percent from the fourth quarter to the first quarter. That advance is generally seasonal, Becker explained in a phone interview: Consumers spend too much during the holidays and give themselves a debt hangover, but they have yet to get relief in the form of their tax rebates. This year, however, delinquencies fell — making the data worth a closer look.

“Nationally, the ratio of credit card borrowers delinquent on one or more of their credit cards declined to 1.19 percent in the first quarter of 2008, down 12.5 percent over the previous period,” TransUnion says in its press release. That doesn’t mean credit card delinquency is no longer an issue, since “the total still remains higher than the same period last year (0.91 percent).”

Credit card debt declined quarter-over-quarter as well. “National average credit card debt per credit card borrower dropped 1.25 percent from the previous quarter’s $1,694 total to $1,673, though the total remains 5.6 percent higher than the same period last year ($1,584),” TransUnion said.

Becker lauds responsible consumer behavior for the declines in debt and delinquency. Amid the credit crunch, lenders are less willing to extend credit even as consumers rely on borrowed money to get themselves through tough economic times. Therefore, “consumers are putting more emphasis on managing the credit instruments that they have so they will be available to them for use,” Becker says.

This summer, delinquencies should head lower as consumers use their tax refunds and stimulus checks to pay down their debt, Becker says, but he notes that delinquencies will subsequently increase.

Although Becker cautions against drawing too many conclusions about the economy from what is admittedly volatile data, the debt and delinquency numbers are nevertheless a bright spot. In this environment, “Consumers are being more cautious with their spending and not putting themselves in a position of overspending as much as they might,” Becker says. When it comes to available credit, “you have to take care of what you have,” he adds.

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  • Andrea Smith

    Credit card debt is on its all time high with today’s economy. Hopefully people can obtain the help they need to get out of debt. Thanks for the article!

  • Doris

    Question #1: I have noticed for a long time inquires found on both my husband and my credit. I don’t even know why they were made or who they were. When I called and asked I could never get a concrete answer. Due to ignorance and frustration I dropped it. I have watched our numbers go down as well due to some of these inquires. Why would I want to trust their (FREE SERVICE) when (not proven yet) our info was sold to 3rd parties in the first place. Make it impossible to honestly monitor our credit.
    Question #2: My husband was in the infantry for 25 years. He was ignorant to what credit reporting was and the services they provided. He never had a credit card until we got together 4 years ago and married 2 years ago. When we first got together he was telling me of his ex and the numerous calls he was getting reference to credit debt from collection agencies. The first thing I did was pull his credit reports from all three companies. I found out that his ex charged a lot of things to his name, signed his name to contracts, and he had no idea. He was receiving calls from credit hounds as well as his parents. She also used his father’s name, their address, and the list goes on. She had his SSN. The first thing I did was placed a freeze on his credit, had him file an identify theft report with the local police to get it on record, and began trying to clean his credit up. I started working on his credit making calls to all of these companies (25 of them) that she charged goods and services on. When I tried to get them removed they basically told me that his name, SSN, etc were on as a primary purchaser. Credit cards were approved via phone and mail. The ones that were local (Alabama) (that she signed his name to) I proved not his and I think are removed. That’s been a challenge too! Some things I could prove weren’t his and some things I couldn’t (majority of the debt). The people she created credit debt with sent the debt to credit collectors. She had access to the money yet used to the money for drugs and alcohol. In turn they hounded us. It took a while to research all this. Their answer to me was: 1st, Lady, a marriage is like a business, she can sign his name to anything (it’s legal). He is name the primary holder therefore he will be held accountable to pay the debt. 2nd, we can’t discuss this debt with you because you are not his wife. I explained the situation and had him do it as well. Still, we got the sorry for your luck; this occurs all the time, response. He had no idea of the debt she left him. I did! Well, stupid me took 2 of my credit cards and settled out the debt she created that I couldn’t remove I paid off with it just to stop the madness. I fell vulnerable, desperate, and got depressed from all the hounding. Now I’m really paying for it. My credit went from 776 to now 653. We don’t have the money to take her to court. Basically she is living a peaceful life and we are in debt to our eye balls and can’t get a home of our own because of all this. Their divorce was pretty nasty and he got full custody of a minor due to the fact that she got her two older kids involved with drugs and alcohol. One is currently serving a prison term. I have only provided you a smidgen of the mess she has left this man.
    I came out of a very controlled financial situation and thought I was doing the right thing. My ex and I had to file a bankruptcy due to him having about 25 credit cards that he opened to run a vending business that I didn’t know my name was on. He had an accountant to manage everything. I just signed the paperwork and got told nothing. That’s another story in itself. I survived all that. I divorced him. Now I’m trying to survive this.
    Any advice!