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Does snow help pay the bills?

By Janna Herron ·
Tuesday, November 15, 2011
Posted: 3 pm ET

It appears the colder the temperature, the more likely you'll pay your credit card bill on time.

At least that's a cursory takeaway from TransUnion's third-quarter report on national credit card delinquency rates. The report released Tuesday showed that North Dakota, Alaska, South Dakota and Wisconsin had the four lowest delinquency rates in the country.

These aren't the states snowbirds flock to for winter. Even the states with the largest reduction in delinquency rates in the last year -- Wyoming, Montana and Idaho -- all have winter destinations and a lot of snow.

Compare that with the states with the highest delinquency rates. Three of them hail from the Deep South --Mississippi, Arkansas and Alabama -- all of which see the thermometer drop to the 50s during the day in January.

The last one, Nevada, has had all sorts of mortgage troubles for the past five years, namely in sunny Las Vegas, where the average low doesn't dip below freezing even in the dead of winter.

Of course, three of the states with the lowest delinquency rates -- the Dakotas and Wisconsin -- also had the lowest average credit card balance, according to TransUnion. That makes it easier for those residents to meet their credit card obligations every month.

But Alaska had the highest credit card debt at $6,980, or $1,516 more than the state with next highest total (my home state of North Carolina). Still, Sarah Palin's home state had the second lowest delinquency rate at 0.45 percent. Alaskans may charge more, but they send in their payments on time.

Overall, more Americans are missing their credit card payments by 90 days or more.

The delinquency rate rose to 0.71 percent from 0.60 percent in the second quarter and marked the first increase since the fourth quarter of 2009. The results echo earlier findings released by the credit companies themselves.

TransUnion attributes the uptick to more risky borrowers getting a credit card. It's true that issuers have been offering credit cards to borrowers with spotty credit more than they did last year.

Equifax said last month that banks issued 5.4 million credit cards to subprime consumers in the first six months of the year, up almost two-thirds from 2010.

That could be a sign of banks gaining confidence in American consumers and their ability to pay their bills. A modest rise in delinquency rates should be expected if more people with sketchier credit histories are running around with new credit cards.

Of course, there is a more pessimistic view. More people, with good and so-so credit, could be running into financial snags. The reasons run the economic gamut: stubbornly high unemployment, higher poverty rate, income stagnation and so on.

But recent headlines of higher retail sales suggest that may not be the case. Your take probably depends on if you're a glass-half-full or glass-half-empty kind of person.

Have you missed a payment lately? If so, why?

Follow me on Twitter: @JannaHerron

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November 16, 2011 at 10:12 am

I'd disagree (disclosure, I work for one of the 3 national credit bureaus).

The rationale is that borrowers who were prime 3-5 years ago are now "sub-prime" or "near-prime" because of the setbacks of the economy. Now, lenders are looking to expand with the people who were hit with extreme circumstances and they have reason to believe will bounce back. I'm not saying I personally 100% agree with that approach, just saying the rationale isn't simply "let's just do whatever we did before." If anything, the CARD Act has made it even harder for companies to "gouge" the lower-spectrum consumers, so those they approve are actually better than similar-looking consumers from years past.

November 16, 2011 at 8:17 am

"Equifax said last month that banks issued 5.4 million credit cards to subprime consumers in the first six months of the year, up almost two-thirds from 2010."

Apparently, no lessons have been learned...if they see a way to make extra money, by lending to people with "spotty" at absurdly high interest rates, they will do it...even to the detriment of those people and this country as a whole.

We have sworn off debt and I know our reports don't look good, yet we receive more credit card offers in the mail now than when things were's stupid.