Debts, Delinquency Rose in 2012 4Q

Posted by Victor Dela Casa

It's the most wonderful time of the year.

The Christmas holiday season is usually the biggest time of the year for consumer purchases highlighting a year full of scrimping. With consumerism on the rise, it is not surprising that credit card debts pile up along as well. This fact was recently reinforced by a report from a top credit bureau in the country.

According to credit bureau Trans Union, credit card debt and delinquency both increased in the final quarter of 2012. Based on their quarterly analyses, the average credit card debt rose along with the delinquency rate in the country. The study analyzed quarter-by-quarter data and trends in consumer activities of credit-active Americans.

The report found that last year’s fourth quarter total showed an increase in average credit card debt per borrower rose by 2.5 percent. Actual average figure shows that it went up to $5,122 in the fourth quarter from $4, 966 in the third quarter while delinquency rate also rocketed from 0.75 percent in the third quarter to 0.85 percent in the fourth quarter.

Experts still believe that the rise in debt and delinquencies is a natural response during that time of the year and that the increases are still below historic norms. Yet in comparison to 2011’s fourth quarter figures, there was a 0.07 percent jump this year in delinquencies. The good news is that average credit card debts per borrower saw a slight fourth quarter decline from 2011’s $5,204 to this year’s $5,122 which is a 1.6 percent drop.

Despite the increase in delinquencies, the drop in average debt is seen as a sign that consumers are managing debts better, and are more diligent about payments. With that being said, the positive sign may see more and more consumers re-enter the credit card market after the difficult last couple of years.

With a quirky U.S. economy and a troubled labor market, it is good to see Americans are able to find some financial stability. A time of plenty can usher in more consumer activities as long as debts are paid promptly.

About The Author

Victor Dela Casa is a Filipino-Canadian who spent over a decade working as a business professional in Canada. Worked in IT, finance, marketing, international trade, public service, project management and the maritime industry. Degree in Economics from the University of the Philippines and Honours Diploma from Eastern College. Currently based in the Philippines and working as a professional writer for a multi-national business processes firm.