Credit card delinquency on the rise

Reporting agency says 11% increase could be an indication that tax refund checks are being used to cover daily living expenses.

EMAIL  |   PRINT  |   SHARE  |   RSS
 
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)
By Julianne Pepitone, CNNMoney.com contributing writer

When will you be debt free?
Enter credit card information
  CC name Balance
($)
Rate
(%)
Minimum
payment($)
1
2
3
Choose a plan
Minimum payments only
Fixed payments
$ monthly
Debt-free deadline
I want to pay off my credit cards in:
years and months
How secure do you feel in your job?
  • Extremely secure
  • Fairly secure
  • A little insecure
  • Not secure at all
CDs & Money Market
MMA 0.40%
$10K MMA 0.36%
6 month CD 0.39%
1 yr CD 0.70%
5 yr CD 1.50%

Find personalized rates:
 

Rates provided by Bankrate.com.

NEW YORK (CNNMoney.com) -- Credit card delinquency rates jumped 11% in the first quarter, possibly indicating that consumers are using tax refunds to pay day-to-day expenses, according to a credit reporting agency report released Monday.

The delinquency rate -- which is the ratio of borrowers 90 days or more delinquent on one or more of their credit cards -- increased to 1.32% in the first quarter of 2009.

That's up 9.1% over the previous quarter, and 11% over the previous year, according to the report from credit reporting agency TransUnion.

The average borrower debt rose 4.09% from the previous year to $5,729, TransUnion said. The agency uses data from 27 million anonymous, individual credit files.

"This increase could be an indication that tax refund checks, typically used to pay down balances in during the first quarter in years past, are now being used to cover daily living expenses," said Ezra Becker, of TransUnion's financial services group, in a written statement.

The economy is losing jobs by the thousands, and mass layoffs and pay cuts have continued the credit crunch. Banks have tightened lending standards because of a heightened default risk, providing less credit to consumers.

State by state: Delinquency rates were highest in Nevada, at 2.44%; Florida, with 1.9%; and Arizona, 1.68%.

Rates were lowest in North Dakota, at 0.73%; South Dakota, at 0.77%; and Alaska, at 0.77%.

Alaska has the highest average bankcard debt, at $7,476, while the lowest is West Virginia with $4,640.

Outlook: TransUnion said it expects the 90-day delinquency rate will continue rising, nearing 1.7% by the end of 2009.

Depending on the effects of stimulus programs and unemployment, the rate's upward climb could hit a peak in late 2010 or early 2011, the report said.

TransUnion expects Nevada will have the highest delinquency rate by the end of 2009, at 2.95%, while Alaska will have the lowest at 0.96%.

But outside influences could have unforeseen effects, the report cautioned.

"The impact the changes to credit card regulations and associated legislation, and the response of card lenders to those changes, will have on consumer behavior and hence delinquency rates is still unknown," the report said. To top of page

Features
They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
These 10 food trends could dominate 2015 So long, kale. Here's what's expected to shake up the food industry next year. More
Beyond Russia: Geopolitical hot spots in 2015 Investors beware: These 5 global crises are likely to rattle the stock market and world economy. More
These 20 antique guns could fetch big bucks Morphy Auctions in Pennsylvania is putting nearly 1,000 old guns on the block. Here are just a few. More
Worry about the hackers you don't know 
Crime syndicates and government organizations pose a much greater cyber threat than renegade hacker groups like Anonymous. Play
GE CEO: Bringing jobs back to the U.S. 
Jeff Immelt says the U.S. is a cost competitive market for advanced manufacturing and that GE is bringing jobs back from Mexico. Play
Hamster wheel and wedgie-powered transit 
Red Bull Creation challenges hackers and engineers to invent new modes of transportation. Play

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.