Consumer Delinquencies Rise Slightly in Second Quarter but Remain Near Historical Lows

Thursday, November 21 at 11:05 AM
Category: Personal Finance

Consumer delinquencies increased slightly in the second quarter but remain well below their historic average, according to the American Bankers Association Consumer Credit Delinquency Bulletin that was released in October.

The composite ratio, which tracks delinquencies in eight closed-end installment loan categories, rose 6 basis points to 1.76 percent of all accounts -- 25 percent below the 15-year average of 2.36 percent.

Bank card delinquencies remained virtually unchanged, rising from 2.41 percent to 2.42 percent of all accounts and remaining 37 percent below their 15-year average.

James Chessen, ABA chief economist, attributed the slight uptick in delinquencies to a sluggish economy and the limits of consumers’ ability to continue deleveraging.

“A leveling off in delinquency rates was inevitable after a four-year downward trend that saw consumers reduce debt and dramatically improve their personal balance sheets,” Chessen said. “Consumers may find it difficult to further improve their financial positions after years of working to pay down debt.”

Delinquencies fell in only two of 11 categories ABA monitors (direct auto loans and home equity lines of credit) while holding steady in one other (RV loans).

“The good news is that delinquency rates remain near historical lows and are unlikely to spike in the near future,” Chessen added.

For borrowers having trouble paying down debts, ABA advises taking action -- sooner rather than later -- to solve debt problems with the following tips:

  • Talk with creditors – the sooner you talk to them, the more options you have
  • Don’t charge more purchases until your problems are solved
  • Avoid bankruptcy – it’s a short-term solution with long-term consequences
  • Contact Consumer Credit Counseling Services at (800) 388-2227.

For more information on budgeting, saving and managing credit, visit ABA’s consumer web page.*

Reprinted from the American Bankers Association. Links marked with * go to a third-party site not operated or endorsed by Arvest Bank, an FDIC-insured institution.

Tags: Credit History, Debt, Financial Education
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