Notice to UMB Cardholders Click here if you recently received a replacement card as a result of a potential compromise.

Credit card delinquency rates rise

Credit card delinquency rates increase

Posted on 11/16/12 9:59:00 AM

According to information recently provided by TransUnion, credit card delinquency rates and balances increased in the third quarter of the year.

The national credit card delinquency rate increased to 0.75 percent in the third quarter of 2012 from 0.71 percent in the third quarter of 2011. The rate also increased from the 0.63 percent that was reported in the second quarter of 2012, which was a seasonal low.

"Credit card delinquencies are following a pattern similar to what we observed in 2011, with declines in the first two quarters of the year followed by an increase in the third," said Ezra Becker, vice president of research and consulting in TransUnion's financial services business unit. "That seasonal consistency is encouraging. Credit card debt trends in 2012 also are mirroring 2011, with a decrease in the first quarter followed by two increases over the next six months."

Becker added that with both delinquency and debt levels remaining relatively low compared to historical norms, credit experts are confident that there will be continued stability in the use of credit card patterns for the short term.

"Non-prime borrowers continue to gain more access to credit. In conjunction with the growth in the overall number of card originations in the last few years, it means that the credit card pie is bigger, and non-prime consumers are getting a bigger slice of that pie," Becker said. "It is possible that the slight increase in delinquencies year over year can be attributed in part to the increased share among non-prime borrowers of new accounts, but even so these delinquency numbers are not a cause for concern."

According to Becker, TransUnion found that consumers are continuing to value their credit cards more than ever and will likely continue to do so until unemployment continues to abate.

Thirty-six states saw an increase in their credit card delinquency rates year-over-year and nine states and the District of Columbia saw decreases.

Americans should make sure they keep their credit card debt at a manageable level considering the effect it could have on their FICO scores, which are used to determine the risk of an applicant when applying for a loan or financing. Consumers should also be sure to keep building money in their basic savings accounts to have enough in case of an emergency.