June 9, 2009
Consumers fell behind on their credit card payments as the recession deepened in the first quarter of the year. For the first three months of 2009, 1.32 percent of consumers were three or more months behind on their credit card payments, up 11 percent over the same period in 2008, according to Trans Union, a credit reporting agency.
Information for the analysis is culled quarterly from approximately 27 million anonymous, individual credit files, providing a perspective on how U.S. consumers are managing their credit health.
Average bankcard borrower debt, defined as the aggregate balance on all bank-issued credit cards for an individual bankcard borrower, inched upward nationally 0.82 percent to $5,776 from the previous quarter's $5,729, and 4.09 percent compared to the first quarter of 2008. The highest state average bankcard debt remains in Alaska at $7,476, followed by Tennessee at $6,869 and Nevada at $6,677.
The lowest average bankcard debt was found in Iowa, at $4,300, followed by North Dakota with $4,414 and West Virginia with $4,640.
The steepest increases in average bankcard debt over the previous quarter occurred in Alabama , Mississippi and Tennessee. The District of Columbia experienced the largest drop in average bankcard debt, followed by the Wyoming and New Jersey.
"As expected, bankcard delinquencies increased in the first quarter both as a national average and in most areas of the country," said Ezra Becker, director of consulting and strategy in TransUnion's financial services group.
"As the recession entered its sixth quarter, we saw continued increases in average bankcard balances, as consumers struggled to meet repayment obligations in a job market that continues to deteriorate. This increase could be an indication that tax refund checks, typically used to pay down balances in during the first quarter in years past, are now being used to cover daily living expenses."
At end of the 2001 recession, the national bankcard delinquency rate had increased to a high of 1.69 percent, and as that recession came to a close in November of 2001, three of the five riskiest areas of the country in terms of bankcard delinquency were to be found in the South: North Carolina, Georgia, and South Carolina. In the current recession, Las Vegas, NV is leading in terms of bankcard delinquency, followed closely by Florida and California metros. Not surprisingly, all three states have led the nation in home foreclosures as well.
This highlights one of the fundamental differences between the two recessions -- the housing market, Becker said. Today, the least risky metropolitan area is Bismarck, N.D., with a credit card delinquency rate of 0.6 percent -- a position fairly consistent with what it held during the previous recession."