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For Immediate Release
July 10, 2019
ABA Media Contact: Mike Townsend
(202) 663-5471
Email: mtownsend@aba.com
Follow us on Twitter: @ABABankers

ABA Report: Credit Card Delinquencies Fall While Other Consumer Delinquencies Hold Steady

 

​WASHINGTON – Consumer credit delinquencies held steady in the first quarter, with delinquencies remaining unchanged for the composite index of closed-end loans and falling significantly for bank cards (credit cards provided by banks), according to results from the American Bankers Association’s Consumer Credit Delinquency Bulletin. Overall, delinquencies fell in five of the 11 categories tracked by ABA while five categories rose and one remained unchanged.

Deliquency Bulletin Graphs, 1Q 2019The composite ratio, which tracks delinquencies in eight closed-end installment loan categories, was unchanged from the previous quarter at 1.78 percent of all accounts. It remains well below the pre-recession average of 2.09 percent (from the first quarter of 2002 to the third quarter of 2007). (See Historical Graphics) The ABA report defines a delinquency as a late payment that is 30 days or more overdue.

“The benefits of a strong job market and rising wages continue to be reflected in relatively low credit delinquencies,” said James Chessen, ABA’s chief economist. “The current economic expansion that has endured for 10 years has provided a solid foundation for consumers who continue to do a good job of managing their finances.”

Delinquencies in bank cards fell 18 basis points to 3.04 percent of all accounts, reversing a 17 basis point increase in the previous quarter and staying well below the pre-recession average of 4.33 percent. “Banks continually adjust their underwriting standards to account for any potential headwinds, and consumers continue to do a solid job of managing their debts and spending within their means,” Chessen said. “It’s the right combination that keeps delinquencies at low levels.” (See Economic Charts)

Delinquencies rose in all three home-related categories. Home equity line of credit delinquencies rose one basis point to 1.10 percent of all accounts, among its lowest post-recession levels but above the pre-recession average of 0.53 percent. Home equity loan delinquencies rose 16 basis points to 2.68 percent of all accounts, above the pre-recession average of 2.12 percent. Property improvement loan delinquencies rose seven basis points to 1.19 percent of all accounts, but remain well below the pre-recession average of 1.65 percent.

“The market for home equity loans continues to evolve given the reduced benefits from the tax law change and a slowdown in home price appreciation,” said Chessen. “Lower mortgage rates should boost demand for housing and help support the market over the next six months or more.”

Delinquencies in direct auto loans (those arranged directly through a bank) rose one basis point to 1.09 percent of all accounts, remaining well below the pre-recession average of 2.09 percent. Delinquencies in indirect auto loans (those arranged through a third party such as an auto dealer) rose two basis points to 2.10 percent of all accounts, above the pre-recession average of 2.03 percent.

Chessen expects delinquencies to hover near current levels in the near term.

“As the economy goes, so do consumers’ finances,” Chessen said. “The data points to continued economic growth and the Fed is likely to cut interest rates over the next six months, which will keep short-term rates low and continue to facilitate the ability of consumers and businesses to meet their obligations.”

The first quarter composite ratio is made up of the following eight closed-end loans. All figures are seasonally adjusted based upon the number of accounts.

CLOSED-END LOANS

  • Composite Ratio remained at 1.78 percent.
  • Marine loan delinquencies fell from 0.72 percent to 0.68 percent.
  • Mobile home delinquencies fell from 3.84 percent to 3.63 percent.
  • Personal loan delinquencies fell from 1.26 percent to 0.90 percent.
  • RV loan delinquencies remained at 0.77 percent.
  • Direct auto loan delinquencies rose from 1.08 percent to 1.09 percent.
  • Home equity loan delinquencies rose from 2.52 percent to 2.68 percent.
  • Indirect auto loan delinquencies rose from 2.08 percent to 2.10 percent.
  • Property improvement loan delinquencies rose from 1.12 percent to 1.19 percent.

In addition, ABA tracks three open-end loan categories:

OPEN-END LOANS

  • Bank card delinquencies fell from 3.22 percent to 3.04 percent.
  • Non-card revolving loan delinquencies fell from 1.70 percent to 1.66 percent.
  • Home equity lines of credit delinquencies rose from 1.09 percent to 1.10 percent.

Consumer Tips

For borrowers having trouble paying down debts, ABA advises taking action -- sooner rather than later -- to solve debt problems. Proven tips are listed below. Additional consumer information on budgeting, saving, managing credit and more is available at ABA.com/Consumers.

  • Contact Consumer Credit Counseling Services at 1-800-388-2227;
  • Talk with creditors – the sooner you talk to them, the more options you have; and
  • Don’t charge more purchases until your problems are solved.

Glossary

Indirect auto loan: loan arranged through a third party such as an auto dealer.
Direct auto loan: loan arranged directly through a bank.
Delinquency: late payment that is 30 days or more overdue.
Bank card: a credit card provided by a bank.
Closed-end loan: a loan for a fixed amount of money with a fixed repayment period and regularly scheduled payments.
Open-end loan: a loan with a fixed amount of available credit but a balance that fluctuates depending on usage such as a line of credit.
Non-card revolving loan: an unsecured, open-end loan that is not linked to a credit card. Examples may include lines of credit for overdraft protection or check credit.

The American Bankers Association is the voice of the nation’s $18 trillion banking industry, which is composed of small, regional and large banks that together employ more than 2 million people, safeguard nearly $14 trillion in deposits and extend more than $10 trillion in loans.

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