Average Atlanta credit balances lowest since 2002, but delinquencies climb

The average credit card debt carried by metro Atlantans is down nearly 13 percent  since the recession began. At $5,946, the average balance is its lowest since the second quarter of 2002 according to credit reporting agency, TransUnion.

If you raised a brow, it’s understandable.

Behind the pretty numbers is a rather ugly reality, says CardHub.com chief executive officer Odysseas Papadimitriou. Nationally, charge-offs — accounts that are ordinarily 180 days delinquent and have been erased — have grown. While credit card debt decreased $12 billion in the second quarter compared to the previous quarter, banks charged off $21.8 billion over the same period, according to the Federal Reserve. That means consumers actually accumulated $9.8 billion in debt.

“It’s trending the wrong way,” Papadimitriou said. “The alarming thing is that it’s 250 percent higher than the same quarter last year. Consumers are going to end the year with $26 billion more in debt than 2009. The group of people you’re looking at [with decreasing card balances] are not the same group of people from a year ago, because those people had balances charged off and no longer have credit cards open.

“Let’s not pat ourselves on the back and say we’re doing a good job; we’re not.”

TransUnion, despite its partially more optimistic report, acknowledges as much. In examining its credit risk index, which measures the probability of consumers becoming at least 90 days delinquent on loans and credit, Atlanta area residents are about a 19 percent greater risk than the rest of the nation.

Unemployment and foreclosures are obvious factors contributing to delinquencies, and thus charge-offs. But, there is another segment that has also brought down the overall average balance of local residents.

“Individuals might be tightening the belt a little bit also,” said Steve Katz, senior director of consumer education at TransUnion. “Individuals who are gainfully employed might just be concerned enough to be more diligent.”

By no means are Atlanta area residents in the clear. The State of Credit report issued by credit reporting agency Experian says area residents’ Vantage credit score is 728 (scale of 501 to 990) — 109th out of 142 cities reported.

If you’re in trouble, follow these steps to start:

1. Don’t wait on your lender  to call you. Be proactive.

2. Seek credit counseling from a nonprofit agency.

3. Begin a debt management plan that will help you pay your bills on time.

4. Consider applying for a secured credit card that reports to a credit reporting company  in order to start rebuilding credit.

5. Apply for new credit in moderation. Every time you apply for credit, your credit score takes a small hit, so apply only when necessary.

6. Monitor your credit utilization ratio. Try to keep card balances low in relation to card limits.

7. Watch your credit report. You can get a free credit report once a year through annualcreditreport.com. Georgia residents are entitled to an additional free credit report by contacting the credit reporting agencies directly. For more information, click here.

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