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Credit card debt rises in third quarter, P. 2

In the last entry, this blog opened a discussion of a recent analysis of consumer credit card debt released by the credit reporting agency, TransUnion. The agency says that during the third quarter, the average credit card debt held by American consumers rose nearly 5 percent, while delinquencies showed a slight uptick.

Slight variations in debt in a given year may be attributable to normal spending habits of consumers. Average numbers across the country may generally follow national trends that do not reflect regional or individual changes in spending.

For instance, American consumers generally tend to increase spending near the holidays. Credit card balances are frequently brought down as consumers pay down debt in the spring. Spending may increase during the summer, which analysts attribute to family vacations. Late summer and early fall spending may see an increase as kids head back to school.

But there may also be some other reasons underlying the recent small uptick in credit card debt, according to the analysts. Commentators say that increased confidence in the economy may have influenced some Americans in spending changes during the summer months this year.

Analysts also believe that an increase in approved credit card accounts from banks may have been a factor in the slight rise in consumer debt. While the rise in debt was noted in the third quarter, data on new accounts generally lags by a quarter. The most recent numbers on new credit card accounts is from the second quarter of this year. New credit card accounts rose slightly more than 3 percent in the second quarter this year over those approved in 2011.

A vice president with TransUnion's financial services business unit says that banks are approving more credit cards for borrowers with less than perfect credit. He says, "Lenders are absolutely issuing more credit in the nonprime space," according to the Associated Press. The credit reporting agency, however, still predicts that delinquencies on credit card debt will remain low through the fourth quarter.

Source: USA Today, "Average credit card debt per borrower up in 3Q," Associated Press, Nov. 19, 2012

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