Credit Card Delinquencies Poised for an Increase

In what I predict will be a good news, bad new trend for debt relief companies it now appears that we may be in early days of an increase in credit card delinquencies. This might be a big increase with both the holiday spending period upon us and employment remaining flat.

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Credit card delinquencies are currently at historic lows rates, that reduces demand for debt relief services. But according to TransUnion today, “The national credit card delinquency rate (the ratio of borrowers 90 or more days past due) increased in the third quarter for the first time since the fourth quarter of 2009, edging upward to 0.71 percent.” This is the first quarterly increase in two years.

I reported recently in this article, we should expect to see more people beginning to struggle with their mortgages. Luckily this should be the last wave of mortgage misery once that wave of option ARM notes reset.

Now if we use our past experience in debt relief we’d think that looks like a good possible increase in demand for debt relief services as people begin to struggle with those mortgages. But a recent study of delinquent credit holders caught my eye and makes me think times are different.

Historically people put dealing with the credit cards first over other debts but Auriemma Consulting Group recently conducted a survey and it indicated that consumers now rank credit cards third in their list of priorities to pay, behind mortgages and utilities. It seems the pain and reality of a foreclosure is just to recent and real for consumers to disregard the mortgage.

Of those in the debt relief space, this news is not good for credit counseling groups that can not or will not offer reduced repayment plans to fit in available funds. But it seems to actually create a potential opportunity for debt settlement companies that can create plans based on both some asset liquidation and monthly savings to liquidate the debt.

See also  Debt Relief Companies Continue to Get Squeezed by Lending

What will be very interesting to watch this year is to see if this will be the second year in the no holiday bump in debt relief services when the post-holiday bills arrive. The response last year from consumers was very muted. My prediction is that it should be similarly muted again this year.

Damon Day - Pro Debt Coach

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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.
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