Credit card data show increase in plastic use

NEW YORK — Consumers used more plastic during the holiday season without ballooning their balances, and the delinquency rate for credit-card accounts fell to its lowest point in 15 years. That's a positive combination reflected in the latest quarterly analysis from the credit reporting agency TransUnion.

The company also noted that the number of new credit cards issued during the last three months of 2010 increased by 19 percent over the same period in 2009. It was just the second straight quarter when more cards were issued. That hasn't happened since late 2007.

The data are drawn from 27 million anonymous Trans Union credit reports, which represents about 10 percent of the company's database.

The average combined balance consumers had on their bank-issued credit cards — including MasterCard, Visa, American Express and Discover — fell to $4,965. That's down 8.6 percent from the fourth quarter of 2009.

That drop reflects both a clear effort to pay down debt and the impact of unpaid balances written off by banks, said Ezra Becker, vice president of research and consulting in TransUnion's financial services unit.

Even so, the average balance remained essentially flat from the third quarter, up just $1. It was just the second time since the summer 2009 that the average balance didn't drop on a sequential basis.

That means plastic was used more during the holiday season. An increase in credit card use during the fourth quarter was typical before the recession changed consumer habits and led more people to focus on paying down their debt, Becker said.

Meanwhile, the number of accounts with payments behind by three months or more fell to its lowest level in 15 years, to just 0.82 percent, from 1.21 percent in the 2009 fourth quarter. It was slightly lower than the 0.83 percent seen during the third quarter.

In the past, late payments would normally rise during the holiday period.

All told, the figures reflect that card users have better control of their credit use despite persistent high unemployment, said Becker. Higher spending also is a sign of their increasing consumer confidence.

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