Credit Card Delinquency Rates

Statistically, credit card delinquency rates are the number of credit card accounts with delinquent payments over the number of accounts in a portfolio.

To b e considered delinquent, cardholders should have failed to pay their bills at least 90 days past the due date. In the last quarter of 2009, the national credit card delinquency rate fell to 1.1%. This is a big difference from the rate recorded over the previous quarter. According to TransUnion, states with the highest credit delinquency rates include Arizona with 1.35%, Florida with 1.47%, and Nevada with 1.98%. The lowest credit card delinquency rates, on the other hand, were from North Dakota with 0.66%, South Dakota with 0.70%, and Alaska with 0.73%. The largest credit card delinquency drop from quarter-to-quarter was found in Mississippi with 13.4%. This quarter also saw eight states increase their credit card delinquency rates.

Fortunately, for the first quarter of 2010, national credit card delinquency rates fell. This ease-off in credit card delinquency rates is attributed to Americans’ efforts in managing their debts. People now prefer to use their savings for expenditures. As much as possible, they only use their credit cards for emergency purchases. In addition to this, credit card companies are also exerting effort to not raise interest rates and other fees to encourage consumers to manage their credit card debts better. JPMorgan, for example, dropped their charge-offs to 7.11% in December from 8.81% in November. Discover, on the other hand, reported that charge-offs were dropped to 8.68% from 8.98%. American Express, dropped defaults to 7.10% in December from the 7.6% the previous month. Capital One, however, rose their charge-offs 10.14% in December from the 9.6% in November. The biggest bank in the U.S., Bank of America, had the highest credit card delinquency rates of the five financial companies studied. Charge-offs rose to 13.53% in December from the 13% in November. With the changes from the Credit Card Act of 2009 fully taking place by the end of February 2010, experts are expecting credit card delinquencies to decrease, albeit slowly.

TransUnion’s forecast of credit card delinquency rates in 2010 indicates that the U.S. will experience a decrease from 1.07% at the end of 2009 to 1.04% at the end of 2010. This is a projected 2.8% year-over-year decrease. TransUnion expects the year-end 2010 credit card delinquency rates to reach 1.36%. Eleven states are said to show a 4% or greater decrease in credit card delinquencies. These states include Washington D.C. with -8.24%, Mississippi with -6.15%, and Rhode Island with -4.94%.