Filed Under:Life Insurance, Life Planning Strategies

Delinquency rates higher among 'revolvers'

Consumers who make partial or full payments on their bank credit cards are less likely to become delinquent than those who only pay the minimum on their account balances, a new report shows.

TransUnion LLC discloses this finding in a new study, “Minimum Payments vs. Actual payments: A Look at Debt Service Behaviors and Credit Capacity.” Based on a random sample of 12 million mortgage consumers, 17 million card consumers and 22 million auto loan consumers, the study explores differences in delinquency as a function of payment status.

The report reveals the following delinquency rates among “transactors” (consumers who pay credit card account balances in full), partial payers and minimum payers:

Card Payment Type

Sub prime

Near-prime

Prime

Prime Plus

Super Prime

Transactors

5.8%

1.78%

0.38%

0.06%

0.02%

Partial Payers

8.92%

2.54%

0.78%

0.16%

0.06%

Minimum Payers

10.36%

3.6%

1.24%

0.21%

0.05%

In its analysis, Transunion characterizes a transaction as a minimum payment if the credit card holder’s actual payment is within three percent of the minimum payment due or within $5 of the MPD.

In any given month, the report shows, about 18 percent of payments are minimum payments, 40 percent are partial payments and 42 percent are full payments. These percentages have varied little since March of 2011, the earliest month tracked in the survey.

“Not surprisingly, this distribution of payments is highly dependent on [the account holder’s] credit score," the report states, noting also measures of payments made versus payments due are “useful indicators of performance across multiple product types.”

The consumer’s payment class — full payer, partial payer or minimum payer — is a function of “tradeline activity,” the report adds. If one bankcard among several owned by the account holder receives only a minimum account payment, then the consumer can be defined as a minimum payer.

The study defines a consumer as a “revolver” if at least one bankcard among several in the consumer’s name receives only a minimum payment on the balance. 

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