Managing Debt

Late Card Payments, Outstanding Balances on the Rise

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Though millions of consumers across the country have made significant strides in getting their credit card debts under control since the end of the recent recession, some may still experience the occasional problem with their borrowing efforts, and that was reflected in the third quarter.

Between July and September, the national rate of severe credit card delinquency rose slightly, as did the amount owed on all credit card accounts, according to the latest quarterly statistics from TransUnion. In all, accounts that were 90 days or more behind on payments rose to 0.75 percent of all outstanding balances, up from the 0.63 percent seen in the third quarter of 2011, and the 0.71 percent seen in this year’s second quarter.

Meanwhile, the amount owed on the average account rose 0.5 percent on a quarterly basis, but 4.9 percent annually, the report said. Consumers now owe an average of $4,996, up from the $4,971 observed for the period between April and June of this year, as well as the $4,762 seen in the third quarter last year.

“Credit card delinquencies are following a pattern similar to what we observed in 2011, with declines in the first two quarters of the year followed by an increase in the third,” said Ezra Becker, vice president of research and consulting in TransUnion’s financial services business unit. “That seasonal consistency is encouraging. Credit card debt trends in 2012 also are mirroring 2011, with a decrease in the first quarter followed by two increases over the next six months.”

Further, in the second quarter of the year, the amount of new credit cards opened by consumers grew 3.14 percent on an annual basis, with those accounts issued to riskier borrowers once again comprising a larger portion of the originations, the report said. Non-prime borrowers accounted for 29.55 percent of new accounts issued in the second quarter, up from the 29.28 percent seen in the same period the year before, and a huge increase from the 23.86 percent observed between April and June of 2010.

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It’s believed that late payments and debt could increase during the fourth quarter of the year as well, given that the holiday shopping season typically leads many Americans to finance gift purchases with their credit cards, which can increase bills to the point they are more difficult to afford.

Image: Brett L., via Flickr

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