Are Credit Cards the New Subprime Disaster?

Are Credit Cards the New Subprime Disaster?

The first six months of 2016 has shown that the total credit card limits among the subprime and deep subprime credit range totaled $6.4 billion, the highest amount reported for those groups in the last five years. The Q2 2016 data is from the latest Experian Market Intelligence Brief report available for download today.

While year-over-year comparisons show a 7% increase in overall delinquency rates, delinquencies have declined sharply in the five years since the start of economic recovery. In fact, at the same time as credit limits have increased, delinquency rates[1] among subprime and deep subprime consumers have decreased by 6%. Overall, all consumers have shown an ability to meet their payment obligations as delinquency rates have decreased by 43% comparing Q2 2016 versus Q2 2011.

“Consumers credit card behavior improved since exiting the recession as evidenced by the growth of credit card limits in particular among the subprime credit card market,” said Kelly Kent, vice president of Experian Decision Analytics. “Yet, even with the solid improvements, the year-over-year figures indicate a slight increase in delinquency rates.”

Across the country, 32 states saw their credit card delinquency rates improve by double-digits during those 5 years. Washington, California, and Oregon led the way, followed by New Hampshire and Hawaii. Looking at the year-over-year comparisons, the 2016 Q2 data shows four states – Maine, Alabama, Washington and New Hampshire –  that saw an improvement in their 60+ data delinquency rates. However, 49 states saw an improvement in rates when comparing Q2 2016 data versus Q1 2016.

States with Largest Improvement in 60+ Day Delinquency Rates

Rank

State

5-year Percent Change

1

Washington

-33%

2

California

-28%

3

Oregon

-27%

4

New Hampshire

-26%

5

Hawaii

-25%

6

Florida

-25%

7

Nevada

-24%

8

Maine

-24%

9

Utah

-23%

10

Wisconsin

-22%

Note: Experian Marketing Intelligence Brief data shows the percent change comparing
Q2 2016 vs. Q2 2011
60+ day delinquency rates data.

Download the latest Q2 2016 Experian Market Intelligence Brief report today.

About Experian
We are the leading global information services company, providing data and analytical tools to our clients around the world. We help businesses to manage credit risk, prevent fraud, target marketing offers and automate decision making. We also help people to check their credit report and credit score and protect against identity theft. In 2015, we were named one of the “World’s Most Innovative Companies” by Forbes magazine.

We employ approximately 17,000 people in 37 countries and our corporate headquarters are in Dublin, Ireland, with operational headquarters in Nottingham, UK; California, US; and São Paulo, Brazil.

Experian plc is listed on the London Stock Exchange (EXPN) and is a constituent of the FTSE 100 index. Total revenue for the year ended March 31, 2016, was US$4.6 billion.

To find out more about our company, please visit http://www.experianplc.com or watch our documentary, “Inside Experian.”

Experian and the Experian marks used herein are trademarks or registered trademarks of Experian Information Solutions, Inc. Other product and company names mentioned herein are the property of their respective owners.

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Shayne Heffernan Funds Manager at HEFFX holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.

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