Debt Relief Industry Forecasts and Trends

New Data Shows People Aggressively Paying Off Debt and Using Cards Less

TransUnion has released new data that indicates consumers made $72 billion more in payments on their credit cards than purchases between the first quarters of 2009 and 2010.

The reason this is newsworthy is because this occurred during a time when it was believed lower credit card debt was being driven primarily by credit card charge offs.

“Many people in the financial services industry believe charge-offs have been the leading factor in declining credit card debt since the start of the recession,” said Ezra Becker, vice president of research and consulting in TransUnion’s financial services business unit. “In fact, some have stated that charge-offs account for the entire change in card balances over the past two to three years. In reality, the dynamic is more complex. Our analysis shows that consumers have made a concerted effort to pay down their credit cards during these uncertain economic times.”

We can only hope that people have found a way to better make ends meet during these tough times and are aggressively digging themselves out of debt.

“This reversal is even more profound when you consider that alternative forms of revolving credit, e.g. home equity lines of credit, were far more accessible in 2004 than in 2009. So while charge-offs have played a major role in lower credit card debt levels, it was not the only factor. Consumers were also paying down their debt across the risk spectrum,” added Becker.

Less consumer borrowing leads to less debt relief demand.

This trend also was supported by an IBOPE Zogby International survey commissioned by TransUnion in early June, 2011. Approximately 55% of consumers said they chose to use their debit card over their credit card more than half the time when making daily purchases. In fact, 47% of respondents said they did so more than three out of four times. Another 8% of respondents said they chose to use their debit card over credit card 51-75% of the time.

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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.


  • On the flip-side, Equifax released this:

    According to Equifax’s latest monthly Credit Trend Report for June 2011, new credit dollars are increasing for auto, bankcard, student loan and home equity revolving lines on a year-to-date basis.

    Total new credit available has increased from $209 billion year-to-date in April 2010 to $240 billion in April 2011 — an increase of nearly 15%. While this number is far below the $400 million plus performances of 2006/2007, the turn follows four years of declines.

    Key findings include:

    Auto loan originations rose nearly 17% year-to-date in April and are up 9% month-over-month. While both banks and captive financiers are originating more auto loans, banks are being much more cautious in the subprime sector. Captive finance sources issued almost 25% of new loans to buyers with scores under 600 in April. The comparable bank subprime number is about eight percent.

    Notable within the data is the rebound in the number of bankcard originations to subprime* borrowers, with an 80% increase in originations for April 2011 vs. April 2010 alone. New subprime bankcard origination levels for January-April 2011 are up more than 66% over 2010 levels. This is of note when compared to the 63% YOY decrease the industry witnessed for the same period from 2008 to 2009.

    Total new bankcard limits have risen as well, with increases of more than 27% (January – April 2011), and new subprime bankcard credit limits experienced an increase of 68%.

    New consumer finance credit loans grew 3.5% year-to-date and two percent month-over-month in April, and – like bankcards and autos – show increases in subprime. In fact, loans to customers with scores below 599 – 41% – are up about two percent over 2010 and almost 10% over 2006.

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