by Joseph Kenny | 01/5/10

TransUnion issues quarterly reports on credit delinquencies. The purpose of the reports is to keep track of credit card, mortgage loans, and auto loan payment rates. These rates are a good indicator of the state of the economy and the state of American households.

Millions of Americans are struggling to meet loan payments of all kinds. That’s why the third quarter TransUnion analysis report was heartening. The third quarter of 2009 showed there were declining credit card delinquency rates. A delinquency for purposes of this report is when a payment is over 90 days past due.

The national credit card delinquency rate fell in the third quarter of this year to 1.10 percent. The highest credit card delinquency states are the same ones with the highest mortgage foreclosure rates. They are Nevada, Florida, and Arizona. The average credit card debt is $5,612 for the third quarter.

Will this trend continue into 2010? And why are debt and delinquency rates falling amid the news of rising unemployment? These are the kinds of questions being asked as the credit tracking company tries to identify how consumers are doing balancing their debt loads in this economic downturn.

Some of the reasons put forward for falling delinquency rates is that people are using their savings for expenditures and are trying to hang on to their credit cards for emergency purchases. Credit cards are major buying tools and provide an element of cushioning. In addition, credit card companies have been making many changes to interest rates and fees for the purpose of encouraging better credit card management.

An interesting comment to note in TransUnion’s report is that the company expects to see a shift in the use of credit card usage and debt management. But just as interesting is the fact TransUnion doesn’t know what they will be. Though many consumers have learned a sad lesson about the consequences of having too much debt, there is no way to know if that lesson will stick through the years. It is hoped that most people now realize the importance of day-to-day liquidity.

Unfortunately, as the economy improves, the national savings rate is dropping. But for 2009 the credit card delinquency rate is expected to remain at or near its current rate.

So will the credit card delinquency rate decline in 2010? The answer is: probably. Americans are doing a better job of managing debt. But paying off debt will be slower than desired due to the high unemployment that will probably last through a good part of 2010. Credit card delinquency rates are currently at 1.1 percent as mentioned. TransUnion predicts they will fall to 1.04 percent by the end of 2010.

The changes that will be implemented with the new credit CARD act in February 2010 are going to have a big impact on the credit card industry. Credit availability is expected to remain tight for a good part of 2010 until credit card companies create new products for consumers.