More Homes Expected to Enter Foreclosure as Credit Card Delinquencies, Debt Soar- By: Leticia Carvalho
According to the credit-reporting agency TransUnion LLC, the percentage of credit card users delinquent with their payments increased to 1.04 percent in the second quarter of this year compared to last year. On the other hand, the average debt of each borrower has jumped by 8.6 percent, bringing it to $1,717 from $1.581 last year.
According to the group’s principal consultant, it is unusual for the delinquency rate to increase during the second quarter. But comparing it to the first quarter’s 1.19 percent, there was actually a considerable decline. The said difference between the two quarters can be attributed to tightened lending guidelines and lowered credit card limits.
As for the rise in the average credit card debt, it can be expected since many consumers are having a hard time staying afloat considering the mess in the housing industry and weak economy. Millions of mortgage borrowers are behind on their credit card payments because most of them are trying to avoid foreclosure. In addition, the cost of fuel has risen during this period, which can explain why many consumers acquired much debt.
For many experts, the rise in credit card debts and relatively high delinquency rates can be considered as signs that the housing crisis can still turn for the worse. With the recent collapse of Wall Street, one can expect a lot of unemployed Americans who will have to face the possibility of losing their homes to foreclosure.
Not surprisingly, delinquency for the second quarter was observed to be highest in the states of Nevada and Florida. These states are among the hardest hit by the foreclosure crisis. The lowest delinquency was recorded in Utah, Vermont and North Dakota.
The delinquency rate is expected to fall further in the next quarter but rebound once again as the holiday season rolls in.
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Leticia Carvalho has been educated in the finer points of the foreclosure market over 5 years.