Delinquency rates among card holders rise in quarter

11/20/2011

COLUMBUS -- Delinquency rates and debt among credit-card holders both in Columbus and nationally are starting to inch higher again.

Despite the increase, delinquency rates remain near the historic lows to which they fell this spring.

The delinquency rate, the proportion of borrowers 90 days or more past due, inched up to 0.7 percent in the third quarter for the Columbus metropolitan area compared with 0.57 percent in the second quarter, according to a new report by credit-reporting agency TransUnion.

The 0.7 percent rate means about 7 out of 1,000 credit-card consumers are delinquent.

Despite the increase in debt or the delinquency rate, there is no worry that consumers are going back to their old ways of racking up major credit-card debt, as was the case before the severe recession hit, said Ezra Becker, vice president of research and consulting for TransUnion's financial-services business unit.

"There's no cause for concern at all," he said.

For Ohio, the rate rose to 0.74 percent in the quarter from 0.6 percent in the second quarter.

The U.S. rate rose to 0.71 percent in the third quarter from 0.6 percent in the second quarter.

An increase in the delinquency rate for Columbus is not exceptional. TransUnion said 89 percent of metropolitan areas showed an increase in delinquency rates.

Average credit-card debt increased $63 in the quarter to $4,762 per borrower, an amount that also remains near historic lows.

The increase in the delinquency rate is the first in two years and is just above the second-quarter rate, which was the lowest in 16 years.

The rise reflects that credit-card companies are issuing more credit cards to higher-risk borrowers while consumers with higher credit scores are opening fewer accounts, Mr. Becker said.

That more high-risk consumers are getting increased access to credit is a good thing, with unemployment remaining stubbornly high and the economy still weak, Mr. Becker said.

More credit gives these consumers some breathing room to cover expenses, he said.

"They desperately need credit to get through tough times," he said.

Even with improved access to credit, lenders and credit-card consumers are remaining cautious about credit use, he said.

"We don't see evidence of a spending spree," Mr. Becker said.

Neither does Janet Harrison, a financial counselor with the Consumer Credit Counseling Service in Columbus.

"In general, credit-card use is down," she said. "People are scared, holding onto their money and using less credit."

Ms. Harrison said she was not surprised to see that the delinquency rate is creeping higher, given the continual high unemployment rate and that others are unable to find any but part-time work.