More Texans are late on credit card bills, car loans
Tardiness also affecting growing number of consumers in other energy-rich states, report shows
As energy layoffs persist and oil dances around $30 a barrel, more Texans have become tardy on their credit card payments or automobile loans.
For the fourth quarter, 12.9 percent more Tex- ans were at least 90 days overdue on their credit card payments than a year earlier, according to TransUnion data released Wednesday. The number of Texans at least 60 days overdue on their auto payments was up 14.9 percent.
Energy-rich Louisiana, Oklahoma, North Dakota and West Virginia also had double-digit percent increases, significantly higher than for the nation overall.
“In Texas, you’re seeing the impact of oil price declines starting to manifest in consumer credit,” said Ezra Becker, vice president of research and consulting for TransUnion, a credit reporting and research company.
Still, Becker emphasized that the actual delinquency rates are still low — just 1.87 percent in Texas for credit cards and 1.63 percent for auto loans — and “nothing that should be cause for panic.”
“We do not see this as a credit crisis at this point,” he said.
Houston delinquency rates were in line with the state, at 1.85 percent for credit cards and 1.61 per- cent f or auto loans.
Becker also found a bright spot in the nationwide bump in delinquency rates. He said it correlates with increased lending to consumers considered somewhat risky borrowers. Increasing credit access while getting better returns for investors, he said, is a worthwhile trade for slightly higher delinquency rates.
With that said, delinquency rates could continue increasing if oil prices remain low and if laid-off employees aren’t finding jobs in other industries. As they burn through unemployment benefits and savings, Becker said, there will be some bills they can-
not afford.
It’s not just laid-off energy workers struggling with credit card debt. Family Houston, which provides free financial coaching, has seen an increase in people who used to work overtime every week and are now working only 40 hours.
Many workers previously paid their credit-card bills in full, but now they can’t pay it all off because of their reduced income, said Richard Simonds, director of Thrive Connection for Family Houston. United Way Thrive, of which Family Houston is a member, is a network of more than 20 Houston-area organizations helping people reach financial stability.
“When the economy is going really well and families have an excess of income coming into the household, it’s really easy to increase their standard of living,” Simonds said. “But when overtime goes away or families experience job loss, it becomes more difficult to tighten their belts or decide what gets paid or not.”
Simonds said he hasn’t noticed more people struggling with auto payments, but there’s been an increase in people looking for options because they’re delinquent on card payments.
There’s also been an in- crease in people who say they’re receiving calls from debt collectors.
“It’s really no surprise that there is a segment of the local economy that is distressed,” said Bill Gilmer, director for the Institute for Regional Forecasting at the C.T. Bauer College of Business at the University of Houston.
Roughly 45,000 energy workers were laid off in the Houston area last year, he said.
Job losses haven’t spilled outside of energy yet, but Gilmer said that could happen if Houston has another slow year.
Becker said failure to pay credit card bills and auto loans won’t necessarily lead to an increase in home foreclosures. TransUnion data actually show consumers pay auto loans before mortgages when they’re struggling.
Texas’ mortgage delinquency rate of 2.28 per- cent in the fourth quarter was down 24 percent year over year and was lower than the nationwide mortgage delinquency rate of 2.37 percent. Houston had a 60-day delinquency rate of 2.11 percent.
“The whole dynamic of the oil crisis is very different than what we saw in the mortgage crisis,” Becker said.