TransUnion, a financial services and risk management firm as well as being one of the big three credit bureaus, reports that credit card delinquencies are at their lowest level in 17 years. The major factor for lower delinquencies is that more consumers are paying their credit card debt and letting the mortgage slide.
Prior to the Great Recession Americans protected their house and were more likely to be late on credit card payments, but falling home values and the need for people to have credit available caused that to change. Consumers are now making a choice based on which asset will give them what they need in the new “normal” economy.
Charlie Wise, TransUnion director of research and consulting:
“Consumers are protecting their credit cards. It gives them financial flexibility”
A review of the most recent Trans Union information confirms that the number of consumers current on credit card payments but delinquent on mortgages was 4.3 percent in 2008 but climbed to 7.4 percent in 2010. That is a 70 percent spike.
Conversely, those delinquent on credit card payments but current on mortgages fell from 4.1 percent in 2008 to 3 percent in 2010.
TransUnion reports the percentage of U.S. Credit card holders who are 90 days late on payments is .7 percent and should remain stable in 2012.
Georgia’s credit card delinquency rates were a little higher (.89%) but should decline to 7.4 percent this year. To contrast, Georgia’s rate in 2003 was 2.28 percent.
Georgia’s 60-day delinquency rate on mortgages was 6.74 percent for the 2010, down from the high of 8 percent in 2009, TransUnion said.
Wise said a number of factors caused the slowing in home foreclosures including some stability in the economy, small increases in employment and a slow down of the foreclosure process in 2011 due to problems discovered in mortgage documents.
The change in consumer attitude is not surprising. More people under or nearing foreclosure are also under water on their mortgage (owe more than the value) and accept that they will lose their home and have decided to protect their credit cards-the only financial tool they have remaining.
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