Consumer credit delinquencies decline in third quarter

James Chessen

James Chessen

Data from the American Bankers Association revealed that consumer credit delinquencies continued to fall during the third quarter, and bank card delinquencies have fallen to an 18-year low as consumers become stronger financially.

Delinquencies are defined as late payments more than 30 days overdue. Bank card delinquencies decreased to 2.75 percent of all accounts, the lowest level since 1994, and well below the 15-year average of nearly four percent. The composite ratio, which evaluates delinquencies over eight loan categories, also decreased to 2.16 percent of all accounts, also below the 15-year average of 2.4 percent.

“Consumers are paying close attention to their finances as they continue to pay down debt in an uncertain economy,” ABA Chief Economist James Chessen said. “The conservative approach consumers have taken to credit over the last several years has allowed them to better manage their debt and better position themselves for the future.”

While delinquencies in personal loans, indirect auto loans, property improvement loans, bank cards and non-card revolving loans decreased, delinquencies related to direct auto loans, mobile home and RV loans, marine loans and home equity credit increased.

Chessen said that while the continued fall of delinquencies is a positive sign, the data revealed little improvement across loan categories, as seen during the first quarter of the year.

“The lack of broad-based improvement remains a cause for concern,” Chessen said. “Some categories have reached historical lows leaving little room for improvement. In addition, slow job growth, continued uncertainty and falling consumer confidence could signal rising delinquencies in the year ahead.”