Credit card data shows use returning to normal

By Eileen AJ Connelly AP Personal Finance Writer NEW YORK (AP) -- Consumers used more plastic during the holiday season without ballooning their balances, and the delinquency rate for credit-card accounts fell to its lowest point in 15 years. That's a positive combination reflected in the latest quarterly analysis from the credit reporting agency TransUnion. The company also noted that the number of new credit cards issued during the last three months of 2010 increased by 19 percent over the same period in 2009. It was just the second straight quarter when more cards were issued. That hasn't happened since late 2007. The data is drawn from 27 million anonymous TransUnion credit reports, which represents about 10 percent of the company's database. Here are some of the highlights: Balances The average combined balance consumers had on their bank-issued credit cards -- including MasterCard, Visa, American Express and Discover cards -- fell to $4,965. That's down 8.6 percent from the fourth quarter of 2009. That drop reflects both a clear effort to pay down debt and the impact of unpaid balances written off by banks, said Ezra Becker, vice president of research and consulting in TransUnion's financial services unit. Even so, the average balance remained essentially flat from the third quarter, up just $1. It was just the second time since the summer 2009 that the average balance didn't drop on a sequential basis. That means plastic was used more during the holiday season. An increase in credit card use during the fourth quarter was typical before the recession changed consumer habits and led more people to focus on paying down their debt, Becker said. Delinquency rate Meanwhile, the number of accounts with payments behind by three months or more fell to its lowest level in 15 years, to just 0.82 percent, from 1.21 percent in the 2009 fourth quarter. It was slightly lower than the 0.83 percent seen during the third quarter. In the past, late payments would normally rise during the holiday period. All told, the figures reflect that card users have better control of their credit use despite persistent high unemployment, said Becker. Higher spending also is a sign of their increasing consumer confidence. State highlights Late payments were highest in Nevada, at 1.27 percent. The state is one of the hardest hit by the housing crisis and an unemployment rate of 14.5 percent in December. Other states with higher than average credit card delinquency rate were Mississippi, at 1.13 percent, Florida, at 1.07 percent and Georgia, at 1.02 percent. In all, 17 states had delinquency rates above the national average. North Dakota remained the state with the lowest delinquency rate, at 0.45 percent. Alaska, at 0.54 percent, South Dakota, at 0.55 percent and Nebraska at 0.58 percent were also among the lowest rates. Improved payment habits are expected to stick. TransUnion predicts the delinquency rate to continue to drift down this year, hitting 0.73 percent by the end of 2011. Published: Thu, Feb 24, 2011