Trends in the US Credit Card Industry

Statistics

Average credit card debt per bankcard user nationally rose 4.81 percent from the previous quarter to $1,694. The largest state average was in Alaska at $2,342 followed by Tennessee at $2,046 and Alabama at $1,996. The lowest average credit card debt was in Iowa at $1,272.

The steepest increases in average credit card debt over the previous quarter occurred in Florida (6.84 percent), Nevada (5.98 percent) and California (5.95 percent). Alaska actually experienced a drop in its average credit card debt (-2.01 percent) while Nebraska and District of Columbia's debt edged up slightly by 0.32 percent and 1.68 percent, respectively.

Credit card loan delinquency (the percentage of bankcard users 90 or more days past due) hit a national average of 1.36 percent in the fourth quarter, up 32.04 percent over the previous period. It was highest in Nevada at 1.95 percent, followed closely by Mississippi at 1.89 percent. The lowest level of bankcard user delinquency rates were found in Utah (0.87 percent), North Dakota (0.92 percent) and Montana (0.92 percent).

Analysis

At the consumer level, credit card debt and delinquency are correlated to local cost of living and regional economic effects, particularly the continuing mortgage crisis. States with a higher concentration of consumers whose hybrid ARM mortgages are resetting to higher APRs-and hence require greater monthly payments -- also are where consumers are relying more heavily on credit cards to finance daily purchases. As total debt service increases, many consumers who were previously at the limits of their liquidity are pushed into delinquency and default. District of Columbia experienced the greatest quarter-to-quarter delinquency growth (48.9 percent), while Alaska's delinquency rate grew the least (8.1 percent) from the previous period.

Forecast

The national 90-day bankcard user delinquency rate is expected to continue to rise throughout 2008 from a value of 1.36 percent in 2007Q4 to 1.9 percent by year end. This is primarily due to anticipated deterioration in economic conditions throughout the country combined with consequences of the mortgage crises. As far as state projections, Nevada (1.93 percent) is anticipated to be the state that will experience the highest average delinquency rate in 2008, while Utah is forecasted to show the lowest level of delinquency among bankcard users.

TransUnion's Trend Data database

The source of the underlying data used for this analysis is TransUnion's Trend Data, a one-of-a-kind database consisting of 27 million anonymous consumer records randomly sampled every quarter from TransUnion's national consumer credit database. Each record contains more than 200 credit variables that illustrate consumer credit usage and performance. Since 1992, TransUnion has been aggregating this information at the county, Metropolitan Statistical Area (MSA), state and national levels.