Credit Card Delinquency Rate Predicted to Remain Low in 2013
TransUnion predicts that credit card delinquency rates will remain low in 2013, but will increase slightly over current levels.
The credit card delinquency rate is the percentage of bankcard borrowers that are 90 days or more delinquent on a credit card account.
TransUnion puts this year’s fourth quarter delinquency rate at 0.83 percent, and predicts a slight increase to 0.87 percent by the fourth quarter of 2013.
Between 2000 and 2011, the credit card delinquency rate has averaged 1.24 percent during the fourth quarter. In the 51 quarters since Q1 2000, the credit card delinquency rate has only been below the 0.90 percent threshold 10 times.
This increase may reflect a rise in non-prime credit card borrowers. The share of non-prime, higher-risk originations was 29.55 percent in the second quarter of 2012, up slightly from 29.28 percent one year ago. It was as low as 23.86 percent in Q2 2010.
“It should be noted that we have seen credit card delinquencies drift somewhat higher in the last year,” Steve Chaouki, group vice president in TransUnion’s financial services business unit. “Some of this can be attributed to the fact that credit card delinquencies were so low, that at some point they were bound to increase. A more significant factor may be that credit card originations have been increasing in the last few years, and with that increase we have seen non-prime borrowers receive not only more credit cards, but also comprise a larger share of new credit cards.”
Credit card debt per borrower is expected to rise in the next year. The latest data from the third quarter 2012 shows the average credit card debt per borrower is $4,996. That is projected to increase to $5,050 in the fourth quarter of 2012 and $5,446 at the end of 2013. If true, this would be the highest credit card debt level since 2009.