The national credit card delinquency rate (the rate of borrowers 90 or more days past due) decreased for the sixth consecutive quarter, dropping to 0.6 percent at the end of the second quarter in 2011, according to data released by TransUnion on Aug. 16, 2011. This is the lowest mark observed in 17 years. Credit card debt per borrower increased $20 in the quarter to $4,699, though it remains near record-low levels.
Although credit card delinquencies were expected to drop, the second quarter 2011 TransUnion data shows credit card delinquency rates improving by more than at any other time since the recovery began in 2009, both on a quarter-over-quarter basis (-18.9 percent) and on a year-over-year basis (-34.8 percent).
"National credit card delinquency rates have fallen to levels not seen since 1994 as consumers continue to tighten their spending," said Ezra Becker, vice president of research and consulting in TransUnion’s financial services business unit. "TransUnion believes that the recovering economy is only indirectly impacting delinquency rates. More important and impactful to the decline in bank card delinquency are that consumers are using credit cards more responsibly, a large number of delinquent accounts have moved to charge-off status and lenders remain conservative in their underwriting."
Between the first and second quarters of 2011, 49 states and the District of Columbia experienced declines in their credit card delinquency rates, with North Dakota being the only state to experience an increase. On a more granular level, 83 percent of metropolitan statistical areas (MSAs) saw declines in their credit card delinquency rates in Q2 2011. This is an improvement compared to Q1 2011, when 74 percent of MSAs experienced a decline. In Q4 2010, only 53 percent of MSAs experienced such a decline.
TransUnion forecasts that credit card borrower delinquency rates will continue to drift downward for the remainder of 2011 as the economy continues its slow recovery and financial institutions maintain a conservative approach to underwriting.