Despite Drop in Credit Card Debt, Total Debt Rises in Fourth Quarter of 2010
TORONTO--(Marketwire - February 16, 2011) - TransUnion's quarterly analysis of Canadian credit trends found that total debt per consumer (excluding mortgage) for the nation increased to $25,709 in the fourth quarter of 2010, up 2.2 percent from the third quarter of 2010 ($25,163). Though total debt generally rises in the fourth quarter because of holiday shopping, among other things, TransUnion found that credit card debt actually declined nearly 3 percent during this period. Conversely, lines of credit, revolving loans and installment loans all showed marked increases in the quarter.
The report is part of a series of quarterly consumer lending sector analyses focusing on trends in the credit card and automotive lending industry. Leveraging TransUnion's credit database, the information for this analysis is culled quarterly from anonymous credit files of all credit-active Canadian consumers, providing a real-life perspective on how they are managing their credit health.
4Q2010 -- Overall Debt/Credit Card Statistics
Market Analysis
"Our latest data set shows that the effects of the recession are still flowing through the system with the number of derogatory accounts increasing 22.1 percent in Q4 2010 compared to the same time period last year. Cautious spending behaviours involving the use of credit cards could also be seen during the holiday period as that debt dropped for the quarter and lines of credit and other forms of payment became king. Usually credit card debt increases at the end of the year as people charge their holiday purchases.
"On a positive note, delinquencies for all credit vehicles continue to decline. Both minor (30 and 60 days past due) and major (90 and 120 days past due) delinquencies dropped 10.6 percent and 22.5 percent in the past year. This is a sign that Canadians are continuing to better manage their finances."
Thomas Higgins, TransUnion's vice president of analytics and decisioning
4Q2010 -- Lines of Credit Statistics
Line of Credit Delinquency/Debt Analysis
"From the increase in lines of credit this quarter, one can safely assume that many Canadians ultimately relied on this form of credit during the last three months of 2010 and the important holiday shopping season. Since many lines of credit offer attractive interest rates, many Canadians have learned to use credit cards in their initial purchase and then pay off or down the balance using their line of credit. This allows them to take advantage of both the loyalty programs many credit cards offer and lower interest rates of their line of credit."
Thomas Higgins, TransUnion's vice president of analytics and decisioning
4Q2010 Auto Statistics
Auto Delinquency/Debt Analysis
"While total auto debt continues to decline in Canada, it is interesting to see auto debt per auto borrower rise. This means those Canadians with autos loans are either purchasing higher end vehicles, or newer ones. We also continue to see positive signs with auto delinquencies as they continue to decline, with the ratio of auto accounts 90 days or more delinquent at just 0.11 percent."
Thomas Higgins, TransUnion's vice president of analytics and decisioning
TransUnion's Market Trends
TransUnion's Market Trends is an in-depth, full sample solution that provides statistical information every quarter from TransUnion's national consumer credit database. Each Canadian consumer record contains hundreds of credit variables that illustrate consumer credit usage and performance. By leveraging Market Trends, customers from a variety of industries can analyze industry trends over an entire business cycle, helping to understand consumer behaviour in different geographic locations throughout Canada.
About TransUnion
As a global leader in credit and information management, TransUnion creates advantages for millions of people around the world by gathering, analyzing and delivering information. For businesses, TransUnion helps improve efficiency, manage risk, reduce costs and increase revenue by delivering comprehensive data and advanced analytics and decisioning. For consumers, TransUnion provides the tools, resources and education to help manage their credit health and achieve their financial goals. Through these and other efforts, TransUnion is working to build stronger economies worldwide. Based in Toronto, with global headquarters located in Chicago, Illinois, TransUnion provides service and support throughout Canada. Visit www.transunion.ca to learn more.
Graphics and/or photographs to accompany this release can be obtained by members of the media by contacting Cliff O'Neal at 312-985-2540 or coneal@transunion.com or Dave Blumberg at 312-985-3059 or dblumbe@transunion.com.
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