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Credit Card Applications » News » Other » Delinquency Rates and Credit Card Debt Hold Steady

Delinquency Rates and Credit Card Debt Hold Steady

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Delinquency Rates and Credit Card Debt Hold Steady

The rate of credit card delinquency remained steady in the first quarter of 2015, while the average credit card balance declined year-over-year, from $5,168 in the first quarter of 2014 to $5,142 in the opening quarter of 2015.

TransUnion’s most recent Industry Insights Report looked at both year-over-year and quarter-to-quarter statistics. Delinquency is defined as the number of borrowers who are 90 or more days behind on paying their general-purpose credit cards. The 1.37% rate in the first quarter of 2015 is exactly the same as it was in the beginning of 2014, but it’s down from 1.47% in the last quarter of 2014.

Average credit card debt also dropped from the fourth quarter of 2014, when it was $5,327, to the first quarter of 2015, when it fell to $5,142. Traditionally, credit card debt and delinquencies tend to drop in the first quarter of the year, when people begin to pay down debt from the holidays and start off the year with resolutions to get in better financial shape.

More accounts opened in 2014

Meanwhile, more people are continuing to open new credit accounts, with an increase of 7.1% in the last year, from the fourth quarter of 2013 to the fourth quarter of 2014. In the first quarter of 2015, there were 359.64 open credit card accounts in the United States, up from 344.53 million in the last quarter of 2014.

“The credit card market continued its momentum on balance growth, which began in the second quarter of last year, with 4.6% year-over-year growth in the first quarter of 2015,” said Nidhi Verma, TransUnion’s director of research and consulting in the financial business unit. “The seasonal quarterly decrease of 3.9% in the first quarter of 2015 was lower than the average of 5% observed in the last five years.”

Subprime borrowers contribute to increased credit card originations

People with less-than-perfect credit are continuing to open new credit accounts, with the subprime market representing a larger portion of new credit card originations in the last quarter of 2014 as compared with the last quarter of 2013. In the fourth quarter of 2013, 13% of new credit accounts were from subprime borrowers, and in the fourth quarter of 2014, that number rose to 16.5%. The subprime average balance per consumer, however, is shrinking year-over-year, as these borrowers are awarded smaller lines of credit compared with people who have good or excellent credit.

TransUnion’s Industry Insights Report is a proprietary report, issued quarterly and compiled using anonymous credit data from virtually every consumer in the United States with a credit report. It examines and summarizes data and trends in the lending industry and offers perspective and insights to both consumers and businesses.

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