Mortgage servicers understand the critical link between consumer debt and mortgage debt — at least traditionally. The equation isn’t exactly rocket science: troubled borrowers usually load up on credit card debt, and perhaps even default on unsecured debts, before defaulting on a mortgage. And during the fourth quarter of 2008, bankcard borrower debt inched upward nationally by 0.33 percent to $5,729 quarter-over-quarter; year-over-year, bankcard debt increased 1.96 percent, according to data released Monday by credit bureau TransUnion. The highest state average bankcard debt was in Alaska at $7,466, followed by Nevada at $6,638 and Tennessee at $6,560; the lowest average bankcard debt was found in Iowa ($4,267), followed by North Dakota ($4,414) and West Virginia ($4,555). Interestingly, the steepest increases in average bankcard debt over the previous quarter, according to TransUnion, occurred in Arkansas (4.2 percent), Mississippi (3.0 percent) and South Carolina (2.9 percent)–servicers tracking increases in debt load among consumers would be well advised to pay attention to portfolio performance in those three states. Nationally, the bankcard delinquency rate — borrowers more than 90 days in arrears — increased to 1.21 percent in the fourth quarter of 2008, up 11 percent over the previous quarter. Nevada, Arizona and Florida led the pack here; none of which should surprise, given the centers of the nation’s housing crisis. But despite the quarterly increase, analysts at the credit bureau suggested the increase was primarily due to seasonality; bearing that out was am 11 percent decrease in delinquencies compared to the fourth quarter of 2007. “Bankcard delinquencies increased in the fourth quarter both as a national average and in most areas of the country,” said Ezra Becker, director of consulting and strategy in TransUnion’s financial services group. “This is primarily a seasonal effect.” Becker said that while “consumers are reaching the limits of their liquidity,” banks have become aggressive it mitigating card losses while consumers have retrenched their own spending habits. “So while it certainly does not yet signal a turnaround in the economy, the trend in card delinquency does indicates that both consumers and risk managers are actively working to control card delinquency, and are meeting with some success,” Becker added. Compared to the 2001 recession, however, consumers are still faring worse: the bank card deliqneuncy rate increased by nearly 10 percent in the wake of the collapse of the tech bubble. Since the current recession began in Dec. 2007, the national average credit card delinquency rate has already increased by 18 percent — and, as Becker notes, “future trends are not particularly optimistic.” Write to Paul Jackson at [email protected].

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