The Federal Reserve Bank collects a tremendous amount of data on consumer spending and financial habits. Among the datasets the Fed collects is a database of account delinquencies for popular financial products like car loans, home mortgages, and revolving accounts like credit cards.
In a new data release, the Federal Reserve shows the rate of 90+ day delinquencies by geographic area. The data reinforces a few commonly-held beliefs about credit card debt:
1. Late payments are the most common in areas with high reported joblessness. Many use credit cards to pay for necessities like food, rent, and other personal needs after a job loss. Naturally, many borrowers eventually fall behind on payments.
2. Late payments also correlate well to late payments on cars and mortgages. Many people see their credit card to be in equity with other existing debt balances, as delinquencies tend to trend with the rate of delinquencies for other common financial products.
3. The worst areas as those where foreclosures are highest. Las Vegas was one of the worst areas for credit card delinquencies as a combination of falling home prices and slower travel business pushed the local economy into a very deep recession.
The Worst Place for Credit Card Delinquencies
Sumter County, Alabama holds onto first place for the area with the worst delinquency rate. In this county, some 25.29% of all credit cards are 90+ days late or greater. Thus, a full one-fourth of all borrowers have credit cards which have not been paid for more than three months. Typically, credit card companies write off balances for those who have not paid in 90+ days as the possibility of collection becomes very slim.
The Federal Reserve Bank’s database includes only counties with 10,000 or more borrowers and discriminates only by geographic region, not by age or makeup of county populations.