In aftermath of holiday season, US credit card late payments rise in Q4 from Q3
By Alex Veiga AP
February 20, 2014, 12:20 am TWN
LOS ANGELES--Many Americans took on more credit card debt and failed to make timely payments in the final quarter of 2013, when consumers typically crank up spending on holiday shopping.
Even so, the national late-payment rate remained close to its lowest level in six years, credit reporting agency TransUnion said Tuesday.
The rate of credit card payments at least 90 days overdue was 1.48 percent in the October-December quarter. That's up from 1.36 percent in the previous three-month period, but down from 1.61 percent in the fourth quarter of 2012, the firm said.
Average card debt per borrower rose 1.7 percent from the third quarter to an average of US$5,325. It slipped 1 percent from a year earlier.
A sequential uptick in late payments and card balances is common in the fourth quarter, which coincides with the holiday shopping season. Many consumers use cards to supplement their spending and often put off making timely payments until the following year.
The latest card delinquency rate remains below the average rate of about 2.2 percent going back to 2007. The lowest card payment rate on the firm's books was set in the second quarter last year at 1.27 percent. The firm draws its figures from data culled from virtually every U.S. consumer who uses credit.
TransUnion projects the credit card delinquency rate will increase to around 1.57 percent in the January-March period.
Borrowing on credit cards plunged after the Great Recession as financial institutions tightened lending standards and households became more cautious about taking on high-interest debt at a time when millions of people were losing their jobs.
But over the past year, consumers have become more confident and have been willing to take on debt. Most of those gains have come in the category that covers auto and student loans, but credit card borrowing has been rising, if more slowly.
Credit card debt climbed by US$5 billion December, the largest jump since May, according to the Federal Reserve.
Regardless, credit card debt is still 15.7 percent below its peak above US$1 trillion reached in July 2008. Credit card debt in December stood at US$861.9 billion, up just 1.9 percent from a year ago, according to the Fed.