Surge in missed payments on new credit cards

According to new data from TransUnion, missed payment levels are being pushed up by a surge in outstanding debt on newly-issued credit cards. This suggests that lending to subprime borrowers is beginning to backfire.

The figures show that almost 3 percent of all debt on credit cards issued in 2015 are at least 90 days behind on payments, just six months after the cards were issued. This compares to just 1.5 percent of cards from 2013, and 2.2 percent from 2014. The delinquency rate for credit cards is 1.53 percent on average nationwide in the third quarter of 2016 - the highest level since 2012.

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A major contributing factor is that many lenders have relaxed their rules and offered credit cards to subprime consumers. Since 2014, the levels of subprime card lending have risen. Over 20 million cards were provided for the subprime market in 2015, which is a rise of 20 percent from 2014, and up 56 percent on 2013 credit card issuing.

TransUnion also found a correlation between the levels of missed payments and states that rely on large energy and oil sectors. Wyoming saw an increase of 20 percent in the number of cards that are 90 days or more past their due date, followed by Oklahoma, with 12 percent, and Texas with 10 percent. It follows reports in April that auto loan and credit card delinquencies are being pushed up by energy sector unemployment levels.

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Originally Posted at: http://www.moneytips.com/surge-in-missed-payments-on-new-credit-cards/637

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