LATE PAYMENTS IN MOST CONSUMER LOAN CATEGORIES
RISE IN THE THIRD QUARTER OF 2006
WASHINGTON, Jan. 8 – Late payments for most consumer loans rose in the third quarter of 2006, according to the American Bankers Association’s Consumer Credit Delinquency Bulletin. ABA’s 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 to 4.41 percent (seasonally adjusted) in the second quarter of 2006. However, credit card delinquencies 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,” said James Chessen, ABA's chief economist. “Energy costs are still taking their toll on consumer budgets, as is the cumulative effect of the Fed’s 17 interest-rate hikes.”
Chessen said 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 life’s financial bumps in the road. Fortunately job and income growth remain strong and the stock market shows renewed strength.” (See data charts on page 5.)
Late payments in eight types of closed-end installment loans, known as the composite ratio, increased to 2.12 percent of accounts (seasonally adjusted) from 1.96 percent in the second quarter of 2006. Delinquencies for this ratio reached 2.17 percent in the third quarter of 2005.
The third quarter composite ratio delinquencies are as follows:
· Personal loan delinquencies increased to 1.91 from 1.86 percent.
· Direct auto loan delinquencies increased to 1.87 percent from 1.72 percent.
· Indirect auto loan delinquencies increased to 2.35 percent from 2.14 percent.
· Recreational vehicle loan delinquencies increased to 0.89 percent from 0.79 percent
· Marine loan delinquencies increased to 1.04 percent from 0.98 percent.
· Home equity loan delinquencies decreased to 1.79 percent from 1.89 percent.
· Property improvement loan delinquencies increased to 1.68 percent from 1.48 percent.
· Mobile home loan delinquencies decreased to 3.24 percent from 3.61 percent.
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Additionally, past-due payments on home equity lines of credit — the lowest delinquency rate category — increased to 0.57 percent from 0.52 percent.
ABA advises consumers to review their finances every year and watch for the 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
· Borrowing from one lender to pay another
For those who are having trouble paying down their debts, ABA advises consumers to take action to solve debt problems with the following tips.
· Talk with creditors — hiding only makes the problem worse
· 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 the ABA Education Foundation’s Consumer Connection Web page at www.aba.com.
The American Bankers Association, on behalf of the more than 2 million men and women who work in the nation’s banks, brings together all categories of banking institutions to best represent the interests of this rapidly changing industry. Its membership — which includes community, regional and money center banks and holding companies, as well as savings associations, trust companies and savings banks — makes ABA the largest banking trade association in the country.
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