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Home » Latest News » Late payments by consumers rose in quarter

Late payments by consumers rose in quarter

Composite ratio for eight types of loans remains lower than year earlier

February 26, 1997

Late payments for most consumer loans rose in the third quarter of 2006, says the latest American Bankers Associations Consumer Credit Delinquency Bulletin, released last month.


ABAs quarterly survey of more than 300 banks nationwide tracks the percentage of consumer loans that are 30 days or more past due.


Credit-card late payments increased to 4.57 percent in the third quarter, compared with 4.41 percent, seasonally adjusted, in the second quarter. Credit-card delinquencies, however, improved from the third quarter of 2005, when late payments reached 4.74 percent.


The pressure points that squeeze consumers budgets still remain, making it difficult for some people to meet their debt obligations, says James Chessen, ABAs chief economist. Energy costs are still taking their toll on consumer budgets, as is the cumulative effect of the Feds 17 interest-rate hikes.


Chessen also says the decline of the housing market has weakened an important resource for many consumers.


With savings rates negative and home values stagnant, the spring has gone out of shock absorbers that handle lifes financial bumps in the road, he says. Fortunately, job and income growth remain strong, and the stock market shows renewed strength.


Late payments in eight types of closed-end installment loans, known as the composite ratio, increased to 2.12 percent of accounts from 1.96 percent in the second quarter. Delinquencies for this ratio reached 2.17 percent in the third quarter of 2005.


Looking at those eight types of consumer installment loans individually, delinquencies increased in the third quarter of 2006 in personal, direct-auto, indirect-auto, recreational-vehicle, marine, and property-improvement loans, and decreased in home-equity and mobile-home loans.


Additionally, past-due payments on home-equity lines of creditthe lowest delinquency rate categoryincreased to 0.57 percent from 0.52 percent.


The ABA claims to be the largest banking trade association in the country. Its members include banks and bank- holding companies, as well as savings associations, trust companies, and savings banks throughout the U.S.

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