Aggregate credit card limits dropped during the fourth quarter ended Dec. 31 (down $9 billion or 0.3%), according to the Federal Reserve Bank of New York's Quarterly Report on Household Debt and Credit, while the percentage of people with at least one account under third-party collections hit a record high. 

Aggregate consumer debt rose slightly in the same period, by $31 billion, a reversal from a trend in place since the fourth quarter of 2008.

An estimated 14.6% of consumers had an account with a third-party collector in the fourth quarter, up slightly from 14% in the third quarter. The previous high point occurred in the second quarter of 2011, at 14.38%.

Other findings:

• There are 383 million open credit card accounts, a slight uptick from the third quarter.

• Balances on credit card accounts increased by approximately $5 billion, the second consecutive quarterly increase.

• The number of credit inquiries within six months an indicator of consumer credit demand continued to decline slightly through the end of 2012. There were 164 million inquiries, a little lower than
the 167 million seen in the third quarter.

Total consumer indebtedness as of Dec. 31 was $11.34 trillion, 0.3% higher than in the third quarter of 2012. Overall consumer debt remains considerably below its peak of $12.68 trillion in the third quarter of 2008.

Mortgages, the largest component of household debt, were roughly flat. Mortgage balances shown on consumer credit reports in the fourth quarter stand at $8.03 trillion, roughly unchanged from the level in the third quarter. Home equity lines of credit (HELOC) were the only product to see a substantive decline in the fourth quarter; balances dropped by $10 billion (1.7%) and now stand at $563 billion.

Non-housing household debt balances increased for the third consecutive quarter and now stand at 2.75 trillion, up by 1.3% in the fourth quarter. All non-housing components increased, with auto loans
up by $15 billion; student loans up by $10 billion, and credit card balances up by $5 billion.

Overall, delinquency rates continued to improve in the fourth quarter. As of Dec. 31, 8.6% of outstanding debt was in some stage of delinquency, compared with 8.9% in the second quarter last year.

About $978 billion of debt is delinquent, with $712 billion seriously delinquent (at least 90 days late or “severely derogatory”).

Delinquency transition rates for current mortgage accounts were stable through 2012, with 1.8% of current mortgage balances transitioning into delinquency in the fourth quarter. The rate of transition from early (30-60 days) into serious (90 days or more) delinquency was also roughly stable, ending the year at 26.1%. The cure rate – the share of balances that transitioned from 30-60 days delinquent to current – improved slightly in the quarter and now stands at 28.1%.

An estimated 336,000 consumers had a bankruptcy notation added to their credit reports in the fourth quarter, a 21% drop from the same quarter last year, and the eighth consecutive drop in bankruptcies on a year-over-year basis.

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