Latest Posts
Home > Debt Relief Industry > Credit Card Delinquencies Move Downward to Levels Not Seen Since 1996

Credit Card Delinquencies Move Downward to Levels Not Seen Since 1996

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.

Credit Card Delinquencies Move Downward to Levels Not Seen Since 1996

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

Credit Card Delinquencies Move Downward to Levels Not Seen Since 1996
Credit Card Delinquencies Move Downward to Levels Not Seen Since 1996

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
Get Out of Debt Guy – Twitter, G+, Facebook

I can always use your help. If you have a tip or information you want to share, you can get it to me confidentially if you click here.

Share This and Spread the Word

About Steve Rhode

Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
  • Steve Rhode

    Much of the stuff that hits my radar is based on what tipsters send in. There is an abundant shortage of good news tipsters sending in independent data and facts. Up to date, make that number almost none.

    I think the difference in the two article is the S&P is about default rates and the TU is about delinquency rates. Defaults are further down the pipeline than a delinquency. The delinquency would be a earlier indicator.

    Here is the link to the S&P release.

    After looking at the default release, do you come to a different conclusion?

  • Steve Rhode

    Mike,

    Didn’t see that one. Thanks.

    The issue still appears to be the overall level of open credit available. G-19 is still flat and that article says credit limits are lower.

    The kicker in the article you posted is:

    “There are a variety of macroeconomic indicators showing that things are picking up for credit card lenders,” he says. “But it’s not enough to reverse the deep plunge in consumer borrowing we’ve seen over the last couple of years. … It will be a long time before we see robust growth.”

  • Robert Stevenson

    I was about to post this!  The Journalist doesn’t show this data which was posted last week. And Steve, just so you know I believe the overall trend is downward for credit card relief demand. However, as much other people have said some how these articles seem to get by, but anything that indicates a downward trend gets posted by the minute.

    And fyi, if you remember I submitted the google trends pics months ago so my point is I do see the trend as downward, but this is why people are accusing you of showing one side of the story more than the other. http://www.cnbc.com/id/4306078

  • Mike Reilly

    Bankcard Account Originations Rose 28% In February, Equifax Says

    This in from Equifax Inc.
    Reported by;

    Collections & Credit Risk | Monday, May 23, 2011
    By Kate Fitzgerald

    In another sign that U.S. consumer credit card issuers are beginning to see some new-account growth following the recession, Equifax Inc. on May 20 reported new bankcard accounts in February were up 28% compared with a year earlier.

    Certain analysts say the uptick is a positive sign, but most observers say it is too soon to look for a major reversal in the broad trend of consumers shedding credit card debt, reflected in the latest Federal Reserve Board data.

    Along with the increase in general-market consumer credit card accounts, account growth among subprime borrowers rose by 75% in February compared with a year ago, Equifax said. Equifax classifies subprime borrowers as those whose average credit scores are less than 660 on scale of 280 (riskiest, or subprime) to 850 (least risky, or prime).

    The Atlanta-based credit bureau based its account-growth measurement on the total number of new credit lines lenders approved during the month; the total number of new accounts approved is not available.

    Lenders during February also approved 66% more in total new credit for subprime borrowers compared with a year earlier, Equifax said.

    The average individual credit limit for new accounts during February was $4,008, down 1.9% from $4,086 a year earlier, while the average credit limit for subprime borrowers was $977, down 4.7% from $1,025, Equifax said.

    The increase in account approvals aligns with Fed survey data released in February suggesting that some large banks began easing credit card underwriting requirements during last year’s fourth quarter.Equifax’s new data suggest “a positive direction” for credit card issuers, says Scott Strumello, an associate at Auriemma Consulting Group.“There are a variety of macroeconomic indicators showing that things are picking up for credit card lenders,” he says. “But it’s not enough to reverse the deep plunge in consumer borrowing we’ve seen over the last couple of years. … It will be a long time before we see robust growth.”

  • Mike Reilly

     Bankcard Account Originations Rose 28% In February, Equifax Says

    This in from Equifax Inc.
    Reported by;

    Collections & Credit Risk | Monday, May 23, 2011
    By Kate Fitzgerald

    In another sign that U.S. consumer credit card issuers are beginning to see some new-account growth following the recession, Equifax Inc. on May 20 reported new bankcard accounts in February were up 28% compared with a year earlier.

    Certain analysts say the uptick is a positive sign, but most observers say it is too soon to look for a major reversal in the broad trend of consumers shedding credit card debt, reflected in the latest Federal Reserve Board data.

    Along with the increase in general-market consumer credit card accounts, account growth among subprime borrowers rose by 75% in February compared with a year ago, Equifax said. Equifax classifies subprime borrowers as those whose average credit scores are less than 660 on scale of 280 (riskiest, or subprime) to 850 (least risky, or prime).

    The Atlanta-based credit bureau based its account-growth measurement on the total number of new credit lines lenders approved during the month; the total number of new accounts approved is not available.

    Lenders during February also approved 66% more in total new credit for subprime borrowers compared with a year earlier, Equifax said.

    The average individual credit limit for new accounts during February was $4,008, down 1.9% from $4,086 a year earlier, while the average credit limit for subprime borrowers was $977, down 4.7% from $1,025, Equifax said.

    The increase in account approvals aligns with Fed survey data released in February suggesting that some large banks began easing credit card underwriting requirements during last year’s fourth quarter.Equifax’s new data suggest “a positive direction” for credit card issuers, says Scott Strumello, an associate at Auriemma Consulting Group.“There are a variety of macroeconomic indicators showing that things are picking up for credit card lenders,” he says. “But it’s not enough to reverse the deep plunge in consumer borrowing we’ve seen over the last couple of years. … It will be a long time before we see robust growth.”

    • Robert Stevenson

      I was about to post this!  The Journalist doesn’t show this data which was posted last week. And Steve, just so you know I believe the overall trend is downward for credit card relief demand. However, as much other people have said some how these articles seem to get by, but anything that indicates a downward trend gets posted by the minute.

      And fyi, if you remember I submitted the google trends pics months ago so my point is I do see the trend as downward, but this is why people are accusing you of showing one side of the story more than the other. http://www.cnbc.com/id/43060784/S_P_Experian_Credit_Default_Indices_Show_Increases_in_Default_Rates_Bank_Card_and_Second_Mortgages_increase_in_defaults_in_April

      • http://GetOutOfDebt.org Steve Rhode

        Much of the stuff that hits my radar is based on what tipsters send in. There is an abundant shortage of good news tipsters sending in independent data and facts. Up to date, make that number almost none.

        I think the difference in the two article is the S&P is about default rates and the TU is about delinquency rates. Defaults are further down the pipeline than a delinquency. The delinquency would be a earlier indicator.

        Here is the link to the S&P release.

        After looking at the default release, do you come to a different conclusion?

    • http://GetOutOfDebt.org Steve Rhode

      Mike,

      Didn’t see that one. Thanks.

      The issue still appears to be the overall level of open credit available. G-19 is still flat and that article says credit limits are lower.

      The kicker in the article you posted is:

      “There are a variety of macroeconomic indicators showing that things are picking up for credit card lenders,” he says. “But it’s not enough to reverse the deep plunge in consumer borrowing we’ve seen over the last couple of years. … It will be a long time before we see robust growth.”

Get My FREE Get Out of Debt Guy Newsletter

It is the smart thing to do.

I promise to keep your email safe and secure.

Close

I want to keep you posted each weekday with just one email about the latest get out of debt news, scam alerts and information to beat back debt.

You can unsubscribe at any time with just one click.

After you subscribe, check your email to confirm your subscription. If the confirmation email does not appear in your inbox in a few minutes, check your spam folder for it. Sometimes it likes to annoyingly hide there.


  • It will keep you posted on the latest scams.
  • You will be alerted to the latest articles.
  • You will wind up smarter than everyone else dealing with debt.