TraunsUnion has just released their latest report on credit card delinquencies. The lower the level of delinquencies, the lower the level for debt relief services since the vast majority of debt relief inquiries are stimulated by delinquent account holders.
In a recent article, here, some in the debt relief community felt that the level of delinquencies was erroneous and not relevant.
As one commenter in the debt relief industry said:
Here is what I find VERY interesting: Journalists and media outlets alike are still not in touch with the street level realities of the economy, or even business as a whole, and can’t be trusted to provide accurate information. They need to be TRULY willing, on an unbiased, selfless level, to SEEK out that “absolute truth”. The thing about truth is that it will always be what it is. facts are facts. Absolutes are absolutes.That can be a hard concept for many as there are certainly perceptions and agendas at play that inhibit the truth from being promoted. Many of these “so-called-journalists” and media outlets blindly report what others are promoting with no real sense of whats really happening because of a lack of self researched/substantiated fact based intel. I have seen “sub-prime” friends being issued credit cards as late as last week. These “experts” are merely slanting the information to benefit themselves. Isn’t that what the media has now become? A self serving, hypocritical, gossip posse with no real moral or factual compass? They simply promote whatever agenda you want/need propogated to suit their goals/needs politically or financially and steer the “herd” whichever direction they want them herded. It’s like watching a movie. The plot and course are already decided. If people blindly follow along they will end up exactly where “they” want them. It’s silly. Think for yourself. Do your homework. Break records. Do the “impossible”. Love people, stand for truth and be strong and courageous. I for one am not a sheeple and won’t believe everything I read. I am desperate for REAL TRUTH.
But unless we are willing to believe that both Moody’s and now TransUnion are acting in collusion to lie about the current status of credit card delinquencies. Here is what the facts and today’s data release show.
TransUnion makes the following statements based on their data.
Consumers, in general, are repaying their credit card debt in a timely manner, with delinquency rates in the first quarter of 2011 reaching levels not seen in almost 15 years, according to new data released by TransUnion today.
TransUnion’s quarterly analysis of trends in the credit card industry revealed that the national credit card delinquency rate (the ratio of bankcard borrowers 90 days or more delinquent on one or more of their bank-issued credit cards) decreased to 0.74 percent in the first quarter of 2011. This delinquency rate is down almost 10 percent quarter over quarter (0.82 percent 4Q10) and down nearly 33 percent year over year (1.11 percent 1Q10). This is the lowest level reached since the third quarter of 1996 (0.76 percent).
The 5.8 percent quarter-over-quarter drop in the average outstanding credit card balance per borrower was not anticipated, as retail sales continued to climb during the first quarter of 2011. This near record low shows that consumers are relying less on credit cards as a preferred payment method. TransUnion does not expect large increases in average credit card balances over the next two quarters due to the continuing deleveraging and the relatively high consumer savings rate (now at 5.5 percent).
“From a delinquency perspective, not since the summer of 1996 have consumers demonstrated a better level of fiscal responsibility in meeting debt obligations on a timely basis. Even with increased economic pressures, they are placing a premium on paying off their credit card obligations and maintaining the health of their card relationships,” said Ezra Becker, vice president of research and consulting in TransUnion’s financial services business unit.
Based on our current economic assumptions, TransUnion believes that the 90-day credit card delinquency rate will still be impacted by seasonal factors, but generally continue to drift downward below 0.7 percent by the end of 2011.
So it appears that the demand for debt relief services will remain flat. And as I’ve said before, it won’t be until creditors loosen up and begin issuing credit again to more consumers and consumers are willing to load up again on credit that we will see a reversal of current demand for debt relief services.
Keep your eye on the Federal Reserve G-19 report for consecutive quarters of increasing revolving debt as an early indicator of debt loading.
Current debt relief companies will continue to struggle with acquisition costs and demand until the number of debt relief companies adjust downwards to meet current consumer demand levels.
My advice at this point remains the same for companies that want to live through this downturn in demand: cut operating costs and overhead to minimum levels, preserve capital to ride out these lean times, and focus marketing efforts on your local market and not national markets.
Search Volume Updates
Search demand for both credit counseling and debt settlement show continued flatness. The highest state for searching for these terms is Nevada which is also the sate with the highest delinquencies in the TransUnion data.
Credit Card Delinquencies Move Downward to Levels Not Seen Since 1996 by Steve Rhode
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