The credit card delinquency rate (the ratio of borrowers 90 days or more delinquent) remained steady at 1.37% in the first quarter ended March 31. The average credit card balance per borrower declined from $5,168 in Q1 2014 to $5,142 in Q1 2015, according to the latest TransUnion Industry Insights Report.
Both credit card debt and delinquencies dropped on a quarterly basis. Credit card debt fell from $5,327 in Q4 2014 while the delinquency rate came down from 1.47% in Q4 2014, reflecting seasonality associated with improved payment patterns after the holidays. TransUnion's Industry Insights Report is a quarterly overview summarizing data, trends and perspectives on the U.S. consumer lending industry. The report is based on anonymized credit data from most credit-active consumers in the U.S. "We generally see a decline in balances in the first quarter as consumers pay down balances following the holiday season," said Nidhi Verma, director of research and consulting in TransUnion's financial services business unit. "However, the credit card market continued its momentum on balance growth, which began in Q2 of last year, with 4.6% year-over-year growth in the first quarter of 2015. The seasonal quarterly decrease of 3.9% in Q1 2015 was lower than the average of 5% observed in the past five years. TransUnion's latest card report found that the subprime risk tier (those with a VantageScore 3.0 credit score lower than 601) represents a larger portion of all new credit card originations. In Q4 2014, the population represented 16.5% of originations for the quarter, a 26.7% year-over-year increase from 13% in Q4 2013. Overall, non-prime originations now make-up 35.6% versus 30.6% of total originations in the credit card market. But the average balance per consumer for non-prime tiers continues to shrink year over year, as it has since 2010, with a year-over-year reduction of 5% in subprime and 2% in near prime (those with a VantageScore 3.0 credit score between 601 and 660). Despite growth in non-prime originations observed in the past year-that is, both subprime and near prime together-total credit lines within the non-prime tiers remain at 9.2% in Q1 2015, consistent with Q1 2014. This is the result of continuous shrinkage of average credit lines within this group of consumers, according to the report. "As the number of credit card accounts continues to rise, we're seeing the non-prime population take a larger share of new credit card originations -- showing an increase of 5.1 points since last year," said Verma. "While increased non-prime originations indicate lenders may be loosening standards for providing credit to this population, the decreased average credit lines point to functioning risk management strategies. The fact that non-prime balances have remained around 35% of the overall credit card balance in the U.S. since 2012 is an indication of appropriate risk controls. The number of consumers under the age of 30 with a balance increased 7% in Q1 2015. The delinquency rate for this younger population also remained above the national average, ending Q1 2015 at 2.03%. TransUnion reported 359.64 million credit card accounts as of Q1 2015, up from 344.53 million in Q1 2014. Viewed one quarter in arrears (to ensure all accounts are included in the data), new account originations increased to 14.41 million in Q4 2014, up 7.1% from 13.46 million in Q4 2013.
