Monday, 21 November 2011

Credit Card Delinquency on the Rise

Credit card delinquency rates have been at their lowest levels in years. Any California bankruptcy lawyer will therefore be alarmed to learn of a slight increase in the national credit card delinquency rate in the last quarter.

The rate increased by 0.71% in the third quarter. This was the first increase in the delinquency data recorded since the fourth quarter of 2009. The average median credit card debt per borrower also increased to $4752 this quarter, an increase of $63. However, the credit card delinquency rate continues to remain the second lowest in the last sixteen years.

The credit card delinquency rate involves the ratio of borrowers who are more than 90 days past their credit card payments. Last month, Bank Of America Corp. reported a small increase in late payments in September, the first time that the bank had reported an increase in a year. The highest rate of default in the credit card industry is typically reported by Bank of America.

Other credit card issuers also reported similar increases. American Express Company also reported a slight increase in late payments in September. This increase in delinquency rates is very worrying to California bankruptcy lawyers because these rates are generally seen as an indicator of future default.

According to some analysts, there is a silver lining in this cloud. This increase in the delinquency rate suggests that more high-risk consumers, who had found it hard to obtain credit during the strained economic situation, are now getting access to credit. The bad news however, is that in the current employment and economic situation, these delinquency rates are only likely to increase further. There could ultimately be a higher rate of national as well as regional delinquency.

1 comment:

  1. Low as the credit card delinquency rate already is, there is some more room left for improvement, as indicated by the early-stage delinquency rate (30 - 59 days), which continues to fall and is now at 0.75 percent, the lowest rate ever. What's even more certain is that defaults will keep falling, as the charge-off rate is a trailing indicator for the delinquency one. For an analysis: