CHICAGO An analysis by TransUnion found the national credit card delinquency rate declined to .69% during the first quarter of this year, down from .73% last year.
While it is not uncommon to see the card delinquency rate start to decline during the first quarter of any year, as consumers start paying off debt acquired during the previous quarter, the firm noted that the comparison of Q1 2013 to Q1 2012 potentially shows a deeper trend that goes beyond the seasonal decline.
“We traditionally see credit card delinquencies and balances decline during the first three months of the year as many people pay down their holiday shopping balances or use their tax refunds to pay off their debts,” said Ezra Becker, VP-research and consulting in TransUnion’s financial services business unit.
Among other findings from the study:
* Average credit card debt per borrower dropped 1.7% to $4,878 in Q1 2013 from $4,962 in Q1 2012. On a quarterly basis, card debt decreased 4.8% from $5,122 in Q4 2012.
* Since the beginning of the recession at the end of 2007, the credit card delinquency rate has declined five out of six times during the first quarter of the year on a quarterly basis. The average first quarter decline for this same timeframe has been 7.2%.
* Only 12 states saw rises in their delinquency rates year over year, with Massachusetts and North Dakota the only ones to experience double-digit basis point increases and those from low starting points.
* 65% of metropolitan statistical areas (MSAs) saw declines in their respective delinquency rates in Q1 2013 relative to one year ago. This is significantly improved over the previous quarter, when only 33% of MSAs experienced year-over-year decreases. Some of the MSAs that experienced the largest year-over-year decreases in Q1 2012 included Seattle (28.1% decline from 0.57% to 0.41%), Denver (26.9% decline from 0.67% to 0.49%) and Salt Lake City (22.6% decline from 0.62% to 0.48%).
* In Q4 2012, new credit card originations dropped 1.6% relative to Q4 2011 (from 7,695K to 7,570K accounts). The share of non-prime, higher-risk originations (with a VantageScore 2.0 credit score lower than 700 on a scale of 501-990) was 28.14% in the Q4 2012, slightly below the same time one year ago (28.38% in Q4 2011), but higher than the 27.72% observed in Q4 2010.
