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Late payments rise in Q4

By Janna Herron ·
Thursday, February 21, 2013
Posted: 2 pm ET

To end 2012, more Americans fell behind on their credit card bills while racking up more debt, a new report found. But both figures remain well below alarming levels.

The percentage of credit card holders who were 90 days late or more on their payments rose to 0.85 percent in the fourth quarter last year from 0.75 percent in the third quarter, according to report released Wednesday by credit reporting bureau TransUnion. The delinquency rate was also a tick higher than in the fourth quarter of 2011, when it stood at 0.78 percent.

The average credit card debt per borrower also increased to $5,122 from $4,996 during the same period. However, the average debt was lower than a year earlier.

Overall, the delinquency rate and average debt are lower than the 10-year fourth-quarter averages, which are 1.06 percent and $5,389, respectively. The quarter-over-quarter increase for both figures are likely seasonal, says Linda Sherry, director of national priorities at consumer watchdog Consumer Action.

"Certainly in the fourth quarter, there is more use of credit cards because people are charging holiday purchases or are planning their spring travel," she says.

Thirty-nine states experienced an increase in delinquency rates, while nine saw decreases. Two states remained unchanged.

The report also found that credit card companies were less aggressive in giving out new cards. New accounts fell by 2.4 percent in the third quarter of 2012 from the year before. The third quarter stats were the most recent available. Lending to riskier borrowers was also slightly less than in 2011. The share of new accounts that went to subprime consumers was 30.51 percent in the third quarter, compared with 30.63 in 2011.

"Assessing the risk of a cardholder is risky business because there are so many ways that a person can lose their income these days," Sherry says. "There are things going on in this economy that makes everybody a risk."

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