June 8, 2007
Reporting agency says 11% increase could be an indication that tax refund checks are being used to cover daily living expenses.
Credit card delinquency rates jumped 11% in the first quarter, possibly indicating that consumers are using tax refunds to pay day-to-day expenses, according to a credit reporting agency report released Monday.
The delinquency rate -- which is the ratio of borrowers 90 days or more delinquent on one or more of their credit cards -- increased to 1.32% in the first quarter of 2009.
That's up 9.1% over the previous quarter, and 11% over the previous year, according to the report from credit reporting agency TransUnion.
The average borrower debt rose 4.09% from the previous year to $5,729, TransUnion said. The agency uses data from 27 million anonymous, individual credit files.
"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," said Ezra Becker, of TransUnion's financial services group, in a written statement.
The economy is losing jobs by the thousands, and mass layoffs and pay cuts have continued the credit crunch. Banks have tightened lending standards because of a heightened default risk, providing less credit to consumers.
State by state: Delinquency rates were highest in Nevada, at 2.44%; Florida, with 1.9%; and Arizona, 1.68%.
Rates were lowest in North Dakota, at 0.73%; South Dakota, at 0.77%; and Alaska, at 0.77%.
Alaska has the highest average bankcard debt, at $7,476, while the lowest is West Virginia with $4,640.
Outlook: TransUnion said it expects the 90-day delinquency rate will continue rising, nearing 1.7% by the end of 2009.
Depending on the effects of stimulus programs and unemployment, the rate's upward climb could hit a peak in late 2010 or early 2011, the report said.
TransUnion expects Nevada will have the highest delinquency rate by the end of 2009, at 2.95%, while Alaska will have the lowest at 0.96%.
But outside influences could have unforeseen effects, the report cautioned.
"The impact the changes to credit card regulations and associated legislation, and the response of card lenders to those changes, will have on consumer behavior and hence delinquency rates is still unknown," the report said.
Source:
CNN Money
Credit-card delinquencies in the US continued to rise this year, according to credit-reporting bureau TransUnion. Dow Jones reports that consumer delinquencies for those 3 months or more behind on their payments rose to 1.32% in the first quarter -- an 11% increase from the same period last year, and a 9.1% increase from the previous quarter.
Rising unemployment and the global recession contributed to the growing trend forcing issuers to reserve more cash for late payments. If it continues, it will ultimately force companies like JPMorgan Chase (JPM), Bank of America (BAC), American Express (AXP), and Discover (DFS) to report more losses on nonrecoverable loans.
The delinquencies were highest in the states hardest hit by the housing crisis. Also worrisome is the rise in late payments, which could be an indication that consumers are using refunds to cover daily living expenses. In past years, tax refunds have traditionally been used to pay down debt in the first quarter.
Source:
minyanville.com
_____________________________
Being a day trader I have been wondering when The credit card bubble was going to hit the news. The analyst are worried because traditionally people used their tax returns to pay down CC debt, but not this year!! LOL
Reporting agency says 11% increase could be an indication that tax refund checks are being used to cover daily living expenses.
Credit card delinquency rates jumped 11% in the first quarter, possibly indicating that consumers are using tax refunds to pay day-to-day expenses, according to a credit reporting agency report released Monday.
The delinquency rate -- which is the ratio of borrowers 90 days or more delinquent on one or more of their credit cards -- increased to 1.32% in the first quarter of 2009.
That's up 9.1% over the previous quarter, and 11% over the previous year, according to the report from credit reporting agency TransUnion.
The average borrower debt rose 4.09% from the previous year to $5,729, TransUnion said. The agency uses data from 27 million anonymous, individual credit files.
"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," said Ezra Becker, of TransUnion's financial services group, in a written statement.
The economy is losing jobs by the thousands, and mass layoffs and pay cuts have continued the credit crunch. Banks have tightened lending standards because of a heightened default risk, providing less credit to consumers.
State by state: Delinquency rates were highest in Nevada, at 2.44%; Florida, with 1.9%; and Arizona, 1.68%.
Rates were lowest in North Dakota, at 0.73%; South Dakota, at 0.77%; and Alaska, at 0.77%.
Alaska has the highest average bankcard debt, at $7,476, while the lowest is West Virginia with $4,640.
Outlook: TransUnion said it expects the 90-day delinquency rate will continue rising, nearing 1.7% by the end of 2009.
Depending on the effects of stimulus programs and unemployment, the rate's upward climb could hit a peak in late 2010 or early 2011, the report said.
TransUnion expects Nevada will have the highest delinquency rate by the end of 2009, at 2.95%, while Alaska will have the lowest at 0.96%.
But outside influences could have unforeseen effects, the report cautioned.
"The impact the changes to credit card regulations and associated legislation, and the response of card lenders to those changes, will have on consumer behavior and hence delinquency rates is still unknown," the report said.
Source:
CNN Money
Credit-card delinquencies in the US continued to rise this year, according to credit-reporting bureau TransUnion. Dow Jones reports that consumer delinquencies for those 3 months or more behind on their payments rose to 1.32% in the first quarter -- an 11% increase from the same period last year, and a 9.1% increase from the previous quarter.
Rising unemployment and the global recession contributed to the growing trend forcing issuers to reserve more cash for late payments. If it continues, it will ultimately force companies like JPMorgan Chase (JPM), Bank of America (BAC), American Express (AXP), and Discover (DFS) to report more losses on nonrecoverable loans.
The delinquencies were highest in the states hardest hit by the housing crisis. Also worrisome is the rise in late payments, which could be an indication that consumers are using refunds to cover daily living expenses. In past years, tax refunds have traditionally been used to pay down debt in the first quarter.
Source:
minyanville.com
_____________________________
Being a day trader I have been wondering when The credit card bubble was going to hit the news. The analyst are worried because traditionally people used their tax returns to pay down CC debt, but not this year!! LOL
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