S&P/Experian Credit Default Indices Show a Significant Decrease in Bank Card Default Rates

Data through August 2011, released today by S&P Indices and Experian for the S&P/Experian Consumer Credit Default Indices, a comprehensive measure of changes in consumer credit defaults, showed the bank card default rates decreased in August to 5.26% from July’s 5.64%. First and second mortgage default rates remained almost flat, with the first mortgage rate moving down from 1.93% in July to 1.92% in August and second mortgage slightly up from 1.25% to 1.27%. Auto loan default rate went up from 1.27% in July to 1.31% in August.

“While there were some moderately mixed results, the overall picture is broadly optimistic,” says David M. Blitzer, Managing Director and Chairman of the Index Committee for S&P Indices. “All indices show default rates well below where they were in the 2008/09 recession, and some are still falling. Bank cards traditionally have the highest default rates, so the decline from 5.64% in July to 5.26% in August is a good sign. The same is true for Miami, where we saw the default rates fall from 5.37% to 4.52% over the month.  While not as large, the other four cities, mortgages and auto loans all saw declining or stable default rates and all of these are posting rates below 2.5%, some even below 1.5%.  Again, good news for the consumer.”

Consumer credit defaults varied across major cities in the U.S. Among the five major Metropolitan Statistical Areas (MSAs) reported in this release each month, Miami shows its lowest default rate since October 2007, decreasing from 5.37% in July to 4.52% in August. New York’s default rates remained flat at 1.80%. Chicago, Dallas and Los Angeles decreased moderately in August to 2.43%, 1.51% and 2.07%, respectively, from 2.54%, 1.60% and 2.15% in July.

The table below summarizes the August 2011 results for the S&P/Experian Credit Default Indices. These data are not seasonally adjusted and are not subject to revision.

S&P/Experian Consumer Credit Default Indices National Indices

Source: S&P/Experian Consumer Credit Default Indices Data through August 2011

Jointly developed by S&P Indices and Experian, the S&P/Experian Consumer Credit Default Indices are published on the third Tuesday of each month at 9:00 am ET. They are constructed to accurately track the default experience of consumer balances in four key loan categories: auto, bankcard, first mortgage lien and second mortgage lien. The Indices are calculated based on data extracted from Experian’s consumer credit database. This database is populated with individual consumer loan and payment data submitted by lenders to Experian every month. Experian’s base of data contributors includes leading banks and mortgage companies, and covers approximately $11 trillion in outstanding loans sourced from 11,500 lenders.

S&P Indices, a leading brand of the McGraw-Hill Companies (NYSE: MHP), maintains a wide variety of investable and benchmark indices to meet an array of investor needs. Over $1.25 trillion is directly indexed to Standard & Poor’s family of indices, which includes the S&P 500, the world’s most followed stock market index, the S&P/Case-Shiller Home Price Indices, the leading measure of U.S. home prices, the S&P Global BMI, an index with approximately 11,000 constituents, the S&P GSCI, the industry’s most closely watched commodities index, and the S&P National AMT-Free Municipal Bond Index, the premier investable index for U.S. municipal bonds. For more information, please visit: .

Standard & Poor’s does not sponsor, endorse, sell or promote any S&P index-based investment product. The S&P/Experian Consumer Credit Default Indices are products of S&P Indices, which operates independently of Standard & Poor’s Ratings Group. Standard & Poor’s Ratings Group plays no role in the compilation, distribution or licensing of the Indices.

Experian is the leading global information services company, providing data and analytical tools to clients in more than 90 countries. The company helps businesses to manage credit risk, prevent fraud, target marketing offers and automate decision making. Experian also helps individuals to check their credit report and credit score and protect against identity theft.