Bank Repo Houses Indicate Credit Card Delinquency Levels

Bank repo houses are also now good indicators for credit card delinquencies, according to a study released by credit report issuer TransUnion.

According to the firm, credit card delinquency rates in the July-September quarter were highest in states with the highest rates of foreclosure filings. The highest credit card delinquency rates occurred in Nevada, where the delinquency rate was 1.98 percent; in Florida, where the card default rate was 1.47 percent; and Arizona, where the rate was 1.35 percent.

These three states also topped the foreclosure rate chart in the July-September quarter, which was compiled by a California-based real estate research firm. Nevada was first in the chart, with a foreclosure ratio of one in 23; Florida was fourth, with a ratio of one in 56; and Arizona was second, with a foreclosure rate of one out of every 53 housing units.

Based on an analysis by the Mortgage Bankers Association, these three states, together with California, accounted for 43 percent of all foreclosure filings and bank repo houses throughout the U.S. in the July-September quarter.

According to TransUnion, credit card delinquencies declined by almost 6 percent during the quarter, but this improvement in the credit card market is being threatened by initial reports that one-month delinquencies in October have been rising.

In the July-September quarter, the rate of credit cardholders in default by 3 months or more on one bank-issued credit card or more decreased to 1.1 percent, down by 5.98 percent compared to the April-June quarter. If compared to credit card delinquencies during the same quarter last year, the delinquency rates are about the same.

The average credit card debt for individual borrowers also dropped during the quarter, as consumers tried their best to control their spending. The average debt owed to issuers of bank credit cards fell to $5,612, down by 1.9 percent from the second quarter average debt of $5,719 and down by 1.7 percent from the average debt of $5,710 during last year’s third quarter.

According to TransUnion, the quarterly decrease in delinquency rates in the July-September quarter was the first time that the rates dropped in 10 years.

Additionally, TransUnion contended that credit card delinquency rates decreased, not only because of consumer efforts to reduce their debt levels and manage the effects of large numbers of bank repo houses, but also because of the decision of card issuers to increase their interest rates, reduce credit limits and close under-used card accounts.

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