Credit Card Delinquencies Remain Steady, Despite 15 Million New Accounts
The latest TransUnion Industry Insights Report reveals credit card debt and delinquency rates have remained steady compared to last year, despite the addition of 15 million new card accounts in America. Delinquencies and debt in the first quarter of 2015 dropped from the previous quarter, but they did not fluctuate much from year-ago levels.
A delinquency is any account that is at least 90 days late in paying their credit card bill.
“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 for the financial services business division of TransUnion. “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.”
The average credit card balance per person dropped from $5,168 in the first quarter of 2014 to $5,142 in the first quarter of this year. The delinquency rate remains steady at 1.37%.
The report also uncovered an interesting trend. Consumers with subprime scores–those under 601–are accounting for a much greater percentage of new credit card originations. In the fourth quarter of 2013, this segment accounted for 13% of the new originations. But in the fourth quarter of 2014, these consumers with low credit scores were accounting for 16.5% of the new originations.
Cardholders under the age of 40 had the largest percentage of delinquencies, with nearly 2% of the population in this age group having delinquent accounts. People under 30 saw the strongest increase in delinquencies, jumping 10% from 2014 to 2015. This was the only age group to show this level of increase.
The cities with the highest delinquency rates were Miami, Atlanta, and Houston.