Oct 25, 2012 Walt Wojciechowski
PRMIA and FICO's most recent survey logged increases in consumer credit, as all banks that responded said delinquency rates either stayed flat or decreased over the last three months. The lower delinquency rates are coinciding with other improvements in the overall economy, including new housing starts and rebounding sales in various markets. According to PRMIA, more than 75 percent of creditors said they believed mortgage delinquencies would decrease in the next quarter, while nearly 13 percent believe outstanding student loans will fall as well. Optimism among banks and other creditors increased, though the report purported that enthusiasm remains lackluster. More than half of respondents to the survey predicted credit card delinquencies will stay the same, while 44.5 percent think average balances on consumer credit accounts will either decrease or remain flat. Fifty-five percent of the creditors believed average balances on credit accounts will increase in the coming months. Part of the optimism is derived from the widespread thought that consumers are becoming more responsible with their finances, as most respondents felt that the population is increasingly focused on paying off old debts before beginning new ones. Still, regardless of what happens in the next few months, delinquencies in the auto loan, credit card, mortgage, small business loan and student loan categories either remained flat or fell in the last year. Prevalence of alternative financial services increasing
Since the recession, alternative finance products have been on the rise among all types of consumers. A 2011 Aite Group survey revealed that prepaid cards are among the most popular forms of alternative finance, as 90 percent of the 500 respondents said they were either very or extremely satisfied with the form of plastic. The research firm projects the prepaid card market will grow to $104 billion by 2014, much of which it attributes to 70 percent of the respondents saying that prepaid was a better deal than traditional banking services, such as debit and credit cards.