Consumers who make partial or full payments on their bank credit cards are less likely to become delinquent than those who only pay the minimum on their account balances, a new report shows.
TransUnion LLC discloses this finding in a new study, “Minimum Payments vs. Actual payments: A Look at Debt Service Behaviors and Credit Capacity.” Based on a random sample of 12 million mortgage consumers, 17 million card consumers and 22 million auto loan consumers, the study explores differences in delinquency as a function of payment status.
The report reveals the following delinquency rates among “transactors” (consumers who pay credit card account balances in full), partial payers and minimum payers:
Card Payment Type |
Sub prime |
Near-prime |
Prime |
Prime Plus |
Super Prime |
Transactors |
5.8% |
1.78% |
0.38% |
0.06% |
0.02% |
Partial Payers |
8.92% |
2.54% |
0.78% |
0.16% |
0.06% |
Minimum Payers |
10.36% |
3.6% |
1.24% |
0.21% |
0.05% |
In its analysis, Transunion characterizes a transaction as a minimum payment if the credit card holder’s actual payment is within three percent of the minimum payment due or within $5 of the MPD.
In any given month, the report shows, about 18 percent of payments are minimum payments, 40 percent are partial payments and 42 percent are full payments. These percentages have varied little since March of 2011, the earliest month tracked in the survey.