Credit-card delinquency rate jumps 11 percent

NEW YORK (AP) — Credit-card holders who, in ordinary years, might have used their tax refunds to pay down their balances, apparently spent the money elsewhere, as the recession deepened in the first quarter.

That’s one of the conclusions that may be drawn from data showing the delinquency rate for bank-issued credit cards rose 11 percent in the first three months of the year, according to credit reporting agency TransUnion.

The delinquency rate jumped to 1.32 percent this year, from 1.19 percent in the first three months of 2008, TransUnion said. The statistic measures the percentage of card holders who are three months or more past due on their payments for cards bearing MasterCard and Visa logos, along with American Express and Discover cards.

The average total debt on bank cards also rose, jumping to $5,776 from $5,548 last year.

Balances typically rise in the first quarter, as holiday spending comes due, said Ezra Becker, director of consulting and strategy in Trans-Union’s financial services group. But retail sales results showed holiday spending took a steep drop. That likely means higher balances now reflect consumers using credit cards to pay for necessities, he said.

While delinquency rates typically rise in the first quarter, this year’s jump was higher, he said, in part because tax refunds were likely used to cover everyday expenses as the unemployment rate shot up.

Becker also noted that many workers who used to received bonuses did not get that income, while others saw overtime wages slip.

That said, the credit-card delinquency rate remains well below the 5.22 percent for mortgages in the first quarter, meaning card holders are trying hard to keep their payments current, even when other debts go unpaid.