Credit Card Industry Trends

TransUnion Analyzes Trends in the US Credit Card Industry

TransUnion, one of the four national credit reporting agencies, has published the first in a planned series of consumer lending analyses report on the credit card industry for the 4th quarter of 2007. The trends noticed by the agency are not so encouraging and the data varies from sad to alarming based on the local cost of living and regional economic situation.

Though the tension on the credit card lending market is growing, banks and companies keep on offering their products. Under the circumstances, however, they are becoming more selective choosing customers and notably tougher when it comes to sub-prime lending.

The analysis provided by TransUnion's Trend Data, a database comprised by 27 million consumer records illustrating consumer credit use and performance, shows unfavorable developments towards credit card debt and delinquencies.

Well, debt and delinquencies are not surprising any more. Interesting is another thing, namely their correlation to certain regions and social groups. At the national level, the average credit card debt rose 4.81% compared to the 3rd quarter of 2008 to $ 1,694, with the larges average debt in Alaska showing $ 2, 342.

It is followed by Tennessee with $ 2, 046 and Alabama with $1,996 of the average credit card debt. The lowest average was set in Iowa at $1, 272.

Credit card mails in these states continue to increase, together with the credit debt counseling services.

Despite having the highest rate of the average credit debt, Alaska experienced a drop of 2.01% in fact, while the steepest rise of the average was registered in California, Florida and Nevada.

The high rates of debt and delinquencies are no doubt the result of the continuing mortgage crisis and are in the most referred to customers who aggressively use their cards to pay for daily purchases.

TransUnion forecasts that the credit card delinquency (the state of being 90 or more days past the due date on a monthly bill) rates are more likely than not to continue rising in 2008 from the 2007Q4 value of 1.36% to 1.9% by the end of the year.

The major part in the debt and delinquency rates deteriorating is played by the worsening economic conditions and subprime credit and mortgage crises.

As far as the forecast goes, Nevada will go through 2008 as the state with the highest average delinquency rate and Utah is anticipated to perform the lowest level of delinquency among credit card holders.

Considering all this, we conclude that some states experience a steep rise in delinquencies and debt and some states see a drop. This fluctuation does not however change the overall situation on the US credit card marker and the average debt per cardholder is still likely to grow.