According to the American Bankers Association’s latest Consumer Credit Delinquency Bulletin, delinquency, based on the number of credit card accounts, was 3.77 percent for the third quarter, down from 3.93 in the previous quarter, and up from 3.21 percent a year earlier (third quarter 2000). Third quarter credit card delinquencies, based on total dollars outstanding, were 4.45 percent (not seasonally adjusted), up from the second quarter’s 4.13 percent and 3.93 percent in the third quarter of last year.
“Many probably expected higher delinquencies, given the terrorist attacks and the economic downturn. But there were many factors that helped brighten the financial picture for consumers last quarter, including a steep decline in gas prices, the income tax rebate and high levels of mortgage refinancing,” said James Chessen, chief economist, American Bankers Association. “Since these same factors continue to be in play in the current quarter, it will be interesting to see how they will counterbalance the effects of continued layoffs and the economic fallout from 9-11.”
“The bottom line is consumers were in a good position to pay down debt last quarter, with the lowest debt service burden ratio since 1999,” Chessen said. The number of delinquent accounts for ABA’s composite ratio of closed-end installment loans fell to 2.40 percent of all accounts in the third quarter of 2001, down from 2.51 percent in the previous quarter. The ratioâwhich tracks eight types of closed-end consumer installment loans, including auto, home equity and personal loansâis higher than it was a year earlier (2.32 percent in the third quarter of 2000). A loan payment is considered delinquent when it is 30 days or more overdue.
Direct auto loan delinquencies increased to 2.56 percent in the third quarter of 2001 from 2.52 in the second quarter. Delinquencies for indirect auto loans decreased to 2.45 percent from 2.60 in the second quarter of 2001.
Delinquencies on home equity loans, based on the number of accounts, increased from 1.18 percent to 1.24 percent in the third quarter. Late payments on home equity lines of credit also increased, from 0.64 percent to 0.70 percent. Home equity numbers are not seasonally adjusted. Home equity lines continue to be the loan category with the lowest delinquencies.
The ABA advises consumers to review their finances every year. ABA offers the following tips for consumers who might be having trouble paying down their debts.
Warning signs of being overextended on credit:
* Paying only the minimum payment month after month;
* Being out of cash constantly;
* Being late on important payments, such as rent or mortgage;
* Taking longer and longer to pay off balances; and
* Borrowing from one lender to pay another.
Solving debt problems:
* Talk with creditors Â hiding only makes the problem worse;
* Don’t charge more purchases until your problems are solved;
* Avoid bankruptcy Â it’s a short-term solution with long-term consequences; and
* Contact Consumer Credit Counseling Services at 800-388-2227.