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Credit card delinquency rates are expected to rise modestly next year, according to a forecast released Wednesday by credit reporting agency TransUnion.
The company predicted that the ratio of borrowers who are 90 days past due on their credit card bills will increase to 0.87 percent by the end of 2013. That's up from 0.83 percent so far in this year's fourth quarter. The average credit card debt per borrower is also expected to grow from $5,050 to $5,446 over the same period.
The predicted uptick in the delinquency rate and balances isn't alarming, said Steve Chaouki, group vice president of TransUnion’s financial services business unit. The delinquency rate remains below historic norms, and it's expected to stay there. Before the recession, the delinquency rate was 1.25 percent. The expected increase is partly because more risky borrowers are getting credit cards.
As for balances, an increase in borrowing is a sign of a more confident consumer, Chaouki said. Credit card debt peaked at the beginning of 2009 at an average of $5,776.
"When you start to see continued spikes (in delinquency and debt), that's when you start to worry," he said. "This is just a return to the norms."
Regionally, credit card delinquencies by state have followed historic trends, Chaouki said. States with poorer populations and higher unemployment had the highest delinquency rates. Mississippi, West Virginia and Arkansas are projected to have the highest delinquency rates at the end of next year. TransUnion expects North Dakota, Montana and Minnesota to have the lowest rates.
States with higher incomes and higher costs of living, such as New York and Hawaii, typically have the highest credit card balances, Chaouki said. TransUnion didn't predict credit card debt per state for next year.
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