Credit Card Late Payments Increase for Most Issuers, Not for Credit Unions

With rising gas prices and other economic uncertainties, people are turning to credit cards to help cover their expenses. Find out how much of an effect this has had on the credit union movement.


The percentage of credit card accounts 30 or more days past due reached an all-time high of 4.8 percent in June 2005, according to the American Bankers Association. Economists attribute the increase in late payments to rising energy prices, low personal savings and the high cost of short-term borrowing.

The credit union industry average for credit card accounts 30 or more days past due however is only 0.7 percent and has stayed within ten basis points of this number over the past two years. Of the 12.3 million credit card accounts that credit union members have, only 79,884 accounts are delinquent. While credit card balances outstanding have grown at their fastest pace in five years (5.9 percent) to $22.6 billion, delinquent credit card balances declined 1.7 percent to $263.1 million.

While this highlights credit unions’ strong underwriting standards and due diligence in providing credit cards to their members, credit unions could consider relaxing their underwriting standards to increase credit card loan balances and increase penetration rates. With loan yields declining to 6.0 percent at June, the higher yields and adjustable rate feature on credit cards could benefit credit unions in improving yields and returns. Currently, 14.3 percent of all credit union members have a credit card account at their credit union.

Source: Callahan & Associates, Bloomberg




Oct. 10, 2005



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