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More O.C. folks ignore credit-card bill
June 20th, 2009, 3:00 am · 34 Comments · posted by Mathew Padilla
TransUnion reports that a higher ratio of Orange County residents skipped three payments on at least one of their credit cards as of March, in a sign the economic downturn is hitting more people in their wallets.
The ratio of borrowers at least 90 days behind rose to 1.43% in March, the third straight quarterly increase from June’s 1% rate. O.C.’s bad debt rate also topped the U.S. rate, 1.32%, for the second consecutive quarter. Before that, O.C. generally looked better than the rest of the country.
The chart (click on it for larger image) shows how delinquency rates for Orange County (the Orange bars) and California — 1.6% in March — have been generally rising since December 2006.
Interestingly, the average credit-card balance in Orange County also increased, hitting $6,757 in March, up 1% from the prior quarter and up 4% from a year earlier.
Ezra Becker, a director of consulting and strategy for TransUnion, said in a release,”As expected, bankcard delinquencies increased in the first quarter both as a national average and in most areas of the country. As the recession entered its sixth quarter, we saw continued increases in average bankcard balances, as consumers struggled to meet repayment obligations in a job market that continues to deteriorate. This increase could be an indication that tax refund checks, typically used to pay down balances during the first quarter in years past, are now being used to cover daily living expenses.”
And, as if that wasn’t depressing enough, Becker added, “At end of the 2001 recession, the national bankcard delinquency rate had increased to a high of 1.69 percent. As that recession came to a close (in November of 2001), three of the five riskiest areas of the country in terms of bankcard delinquency were to be found in the South: North Carolina, Georgia, and South Carolina. In the current recession, Las Vegas, NV is leading in terms of bankcard delinquency (2.6 percent), but is followed closely by metropolitan areas within the state of Florida (Miami, 2.5 percent) and California (Stockton, 2.4 percent). This highlights one of the fundamental differences between the two recessions—the housing market. Today, the least risky metropolitan area is Bismarck, N.D. (with a credit card delinquency rate of 0.6 percent)—a position fairly consistent with what it held during the previous recession.”
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What’s going on in the housing market is the same in credit card world? There are all these companies that offer debt settlement, bottomline they take about 30-35% off your existing debt. However, this is a knock on your credit. Also, what happens is they are put on a new payment plan. Most of my friends in the business say that consumers pay for about 3 month’s or so and just give-up. Similiar to loan mod’s and foreclosures. Bottomline, people have way to much debt!
I’ve heard of these companies, and that laid off mortgage workers are among those starting such firms. Seems like more playing in the gray area, like subpime was.
Hmm….more irresponsible people!
Sounds like the government needs to come in and cloud these numbers with moratoriums and more taxpayer bailouts for these irresponsible people.
What’s going to happen when 3 more years of Alt-A mortgages recast?
What’s going to happen when unemployment continues to climb?
What’s going to happen when the previous 2 years of government teasers and loan modifications re-default?
What’s going to happen when we have to pay for the 11 trillion dollar bailout?
This whole thing is a joke!
These are the results of the 80’s-90’s until the last 2 years
the days of pizza and chanpagne are gone
the orgies of spending reckless in non-sense, and talking/walking like millonaires.
is pay-back-time
7 lenders get immunity from state foreclosure prevention act.
The law prompted 41 applications this week from lenders and loan servicers aiming to prove their modification programs meet the state’s test.
Many more are expected next week.
State agencies reported Friday that 38 institutions received temporary 30-day immunity while the state reviews their applications.
The banks want the freedom to foreclose on deadbeats while the state wants to reward the deadbeats!
Since the creation of the banking system until nowadays the whole system is corrupted
where in the world any person wants a house with 30 years to pay mostly interests? if this is not a ripp-off from the system…well only in America
Most of the countries have 3-4% ( no-points) to pay in 15 years, and most of the payment goes to the principal.
Although these are CA stats, we are seeing many of the same trends in Florida. The concern here is that rates eventually trend up making the whole cycle repeat itself.
I suppose the pres will bail them out too, but only the ones who don’t pay their bills.
one giant default party
with fire sale prices on any asset debt related
is the only way out of this mess
then let’s see where incomes fall…
Sorry, but credit card firms jacked up rates (64% is the highest I have heard on the radio so far) and wondering why people are not making payments.
I hope the credit card companies go under.
We, too, hope that credit card companies go under. We are less than a year from retirement and since Chase took over WaMu, they raised our credit card rate to 32.99%. When we called then to see if they could reduce the rate, the supervisor said that since it was a “new” account we would have to wait for 6 months to try again . . . even though we’d been with WaMu forever. Now when it is a day past due, they FLOOD us with hatassing phone calls. Last month we received 21 calls in 3 days, 15 in one day alone. When we talk to a person they say 2 months are due, when in fact only one is due just three days prior. Since yesterday, we are being called every 45 minutes; however they now are only getting our FAX machine. They can stick it where the sun doesn’t shine.
why are you late with your payments?
why do you carry a balance?
why don’t you stop using your credit card?
why on earth do you need a credit card???
Orange County is a mess, and it will get much worse. Rising unemployment in a county where the cost of living is not based in reality. Add the fiscal woes of the state, and you have a recipe for disaster. What do you suppose these credit junkies will do when the credit card companies pull the plug before the end of Summer ? Unemployment, if they have it, will not pay for daily coffee, car payments, rent/mortage,food, and entertainment, let alone kids.
This is going to get really ugly.
Just one late payment can really hike up your monthly payment, to the point of absurdity. I used to work at a collection agency and I would say 90% of the time people stopped paying after getting slapped with late payment charges.
Hell, I was 2 hours late for a payment once and they tried to charge me $85! It’s ridiculous.
You paid late and were penalized. Pay your bills as soon as you get them and late fees go away. What a concept.
Yeah no s–t, you’re brilliant
not all people with credit card debt that no-longer pay, are irresponsible…when credit card companies jack your intrest rate to 30% from 5% for no reason at all…your monthly minimum just tripled..forcing people to go deliquent on there debt….credit cards are a scam!
Credit card companies are criminals. They force that stupid cards down our throats, jack the rates and expect us to make the high payments on a balance that will never go down. I hope they all go out of business.
Additional there are no jobs out there, or only low paying jobs. Companies are laying off thousands of workers. If companies would have kept their workers the economy would have started to recover by now. Most companies do not have a clue, nor do their management.
Obama will raise taxes to such a high level, the remaining businesses will also fail.
How did the credit card companies force the credit cards down our throats? What ever happened to personal responsibily, and saying “No”, this is not good for me?
If there was no credit in this world we wouldn’t be in such a financial disastrous mess.
Cash is the only way to go.
Went to the party yesterday. I have never seen so many depressed people per sq. foot. Every family has a member who either lost a job and can’t find another one or is very insecure about their current one. Those are the folks from across all industires; manufacturing, service, computers, finance, you name it.
We need a catalyst that would spark a real recovery. Not the one that just creats another and much bigger bubble.
People had massive credit lines and would fire up the heloc atm machine every two years to pay off credit debt. Now these people along with the banks are the bag holders.
What!? Wealthy, Conservative OC not paying its bills? Wow! You mean the OC is starting to feel the recession? I’m shocked!
It’s too bad. BoA bought out MBNA and then changed my 8.9% APR card to highest prime of the quarter plus 10% as an adjustable. I’ve never been late, a risk, or anything. Perfect credit, multiple mortgages but I’m faithful to my obligation. I would not have put $15k on that card at the curent 14.9%. I’ll be paying off the card in the next 3 months and then cancelling. It is not worth risking them arbitrarily changing terms again. Paying cash is better if you can do so, and if I end up losing houses, fine, but I won’t have CC collectors to worry about.
The banks do it to themselves. They take people who are not risky and instigate risk and wonder why people give up. They change bankruptcy laws so they don’t provide protection so the people became desperate. Mailman take a day or two too long and you’re on universal default. It is better people do not even ever get a credit card in the first place. They are no longer helpful but a mere means of enslavement. Mortgage payments are no better. You pay mostly interest for 30 years. 6% interest on a mortgage is closer to 150% by the end. Why cannot we just pay interest on the purchase price, rather than revolving it every month?
death to all brokers and bankers
OMG, less than 2 percent are 90 days behind….what is the big deal here? This does not signal any massive credit disruption. Heck, if I was a CC company and only less than 2 percent defaulted, I would be a happy clam.
the trend is not your friend.
I think all creditcard companies are evils. They want you to be late, and they have good reason to charge you all kinds of fees, increase rate, and they make more money. People we should get rid of the debt ASAP and them stop using any credit card. Cash Only. If you have money, spend, if you don’t have money, don’t spend. I think we have to go back to the old fashion now.
I have credit cards, but I pay my balance,when it is due. I have an 843 credit score. Not because of high income,but because I don’t buy things that I don’t need or can’t afford. “Keeping up with the jones” got us into this mess. Using our home equity as an ATM didn’t help either.
Our schools do not teach personal finance and the credit card companies start signing the kids up on our college campuses, so they never have a chance to be debt free.
Mathew I am no expert but maybe you have some resources to find out if this is true but I have heard that credit card companies are raising the rates based on the risk history of the area a person lives in.
Such as in this zip code area we loast an average of % dollars.
Capital one sent me a letter stating that after dec 2001 my rate is going up to 24.94 and any purchases will be considered a promotion rate. This isnt a big deal since I have $150 on it and am planning on canceling it once its paid off.
I would think that this raising rate thing is due to geography rather then a persons credit history. To many people with good payment history and ratings are geting rate hikes.
What is your vies on this Mathew?
Here’s a concept to those surrounded in credit card debt…don’t buy what you don’t have in the bank. Now I know that is a simple philosophy and life is more complicated than that but if you try and live your life by only purchasing something you can afford right now it might be a little less complicated. For those who have credit card debt due to outstanding circumstances, obviously this doesn’t work, but many people could buy the Target purse instead of the Coach one. You don’t need so many shoes ladies, the guys don’t care about your Prada anyhow.
Oh and if you live your life by only purchasing what you can afford (assuming no outstanding circumstances), you could don’t worry about your interest rate. It also I think made it easier for me when I did call to get my rate lowered just in case I ever had to carry a balance due to any unforeseen circumstances/disaster.
Please people, don’t preach to others to make sound financial decisions regarding their credit card habits. I need my neighbors to carry a balance and pay interest charges so my CC company can stay in business. I get a nice cash back bonus from my CC company for every purchase I make and I don’t carry a balance nor pay interest charges. Someone else has to in order for me to get money back.