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National credit card debt and deliquency rises

Emily Crone

TransUnion just released its quarterly credit card analysis for the final three months of 2007, and the findings aren’t encouraging. Credit card debt and delinquency have both risen, which the credit bureau attributes this to local cost of living and regional economic effects (namely, the mortgage meltdown).

“States with a higher concentration of consumers whose hybrid ARM mortgages are resetting to higher APRs — and hence require greater monthly payments — also are where consumers are relying more heavily on credit cards to finance daily purchases,” the analysis says. “As total debt service increases, many consumers who were previously at the limits of their liquidity are pushed into delinquency and default.”

In the fourth quarter of 2007, the national average of credit card debt per bankcard user rose to $1,694, which is 4.81 percent higher than in the third quarter. Alaska led the pack, with an average of $2,342 in credit card debt per person, though credit card debt dropped 2.01 percent compared to the state’s previous quarter. Tennessee came in second with $2,046 in credit card debt, and Alabama third with $1,996. Iowa came in lowest, with the average of $1,272 per person.

The highest sequential quarter-to-quarter rise in average credit card debt happened in Florida, which experienced a 6.84 percent increase.  Nevada was close behind, with a leap of 5.98 percent, and California next, with a jump of 5.95 percent.

Not only did debt increase, but so did credit card loan delinquency, which TransUnion defines as “the percentage of bankcard users 90 or more days past due.” The national average hit 1.36 percent in the fourth quarter, which is a troubling 32.04 percent higher than the previous quarter. Nevada and Mississippi had the highest delinquency rates (1.95 and 1.89, respectively), while Utah, North Dakota and Montana had the lowest (.87, .92 and .92). Alaska’s delinquency growth changed the least quarter-to-quarter at 8.1 percent, while the District of Columbia’s was the highest, shooting up 48.9 percent.

The news doesn’t get much better: TransUnion predicts the delinquency rate will continue to rise this year, going from 1.36 percent at the end of 2007 to 1.9 percent by the end of 2008. Nevada is expected to have the highest delinquency rate this year, while Utah is predicted to have the lowest.

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