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With less of an appetite for consumer debt and tightened credit standards squeezing out the riskiest customers, delinquencies and debt loads have fallen in every market across South Carolina in the second quarter.
By Andy Owens
aowens@scbiznews.com
Published Aug. 27, 2010
Credit card balances and defaults are down across South Carolina, but consumers in the Charleston area are carrying more credit card debt than other parts of the state, according to information from a national credit reporting agency.
Data from the past four years show the ups and downs of the recession as credit card debt spiked in 2009, hitting a four-year high across South Carolina’s largest markets. Delinquencies on credit cards also jumped in 2009, and then plummeted in 2010, TransUnion LLC’s data show.
College of Charleston economist Frank Hefner said the drop in delinquencies can be partly explained by Americans’ reaction to the depth of the recession by paying down and then staying away from consumer debt. He also said the tightening of credit standards, more intense government monitoring of lenders and the heightened risk aversion of big banks comes into play.
“Credit card companies are not happy anymore, so even qualifying for that is not easy to do,” Hefner said. “The people that might default again, they’re not getting credit, and everyone else is being conservative.”
Consumer spending is often a benchmark for economic health and has been traditionally credited with hastening the end of previous recessions; but Hefner said this downturn has more in common with recessions in the early 1900s than more recent financial downturns.
“All rules of thumb only work when times are normal, and this is kind of a unique recession,” he said. “If the consumers aren’t buying, then that’s a problem. Businesses also invest in new 
machinery in anticipation of increased consumer spending.”
Unsecured defaults
The highest percentage of delinquencies recorded across the state for the second quarter was in Sumter County, at 1.14%, representing a decrease from 1.41% during the same quarter the previous year.
The region with the lowest rate of credit card delinquencies was Anderson County, at 0.77%. Except for the Florence, Myrtle Beach and Sumter regions, every market in the state had a delinquency rate of less than 1% for the second quarter of 2010. In the second quarter last year, only Greenville had a delinquency rate of less than 1%.
Nationally, TransUnion reports a decrease of 23.47% in delinquencies in the second quarter compared to the previous year. Every state but Alaska saw a drop in credit card defaults in the second quarter. South Carolina’s delinquency rate dropped by 21.85%, less than the national average.
Falling debt
Credit card debt dropped in every metropolitan statistical area in the state from the second quarter of 2009 to the second quarter of 2010.
The average debt balance in the Charleston-North Charleston-Summerville MSA is higher than in any other region of the state, at $6,584, according to TransUnion. That amount is 9.36% lower than the previous year’s balance, which was $7,264.
The region with the lowest average consumer debt is Sumter County, where residents owe $4,849 on average. That is closely followed by the Spartanburg and Greenville MSAs.
Nationally, TransUnion reports a 13.43% drop in average debt in the second quarter compared to the previous year’s debt. Americans held an average of $4,951 in credit card debt in the second quarter of 2010, which is near the national low of $4,417 posted in 1999.
Across South Carolina, the average credit card debt fell 10.32% from 2009 to 2010. Every state saw a drop in average credit card debt in the second quarter.
“This could be good in the sense that people are adjusting their personal portfolios, but it’s also saying that a lot of people are looking at things with sort of a different twist,” Hefner said. “It’s even a bigger issue for people who have jobs and think they might be terminated any minute. As long as that kind of fear is hanging over everyone’s heads, it’s not going to change.”
Reach Andy Owens at 843-849-3141.
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