Jump to Content
ABA: The American Bankers Association
Press Release

ABA Report: Delinquencies Improved in Second and Third Quarters of 2020

Credit card delinquencies fall to lowest levels on record

WASHINGTON —

Consumer credit delinquencies fell significantly in the second quarter of 2020 before holding steady in the third quarter amid significant fiscal support and sound financial management from consumers, according to results from the American Bankers Association’s Consumer Credit Delinquency Bulletin. Overall, delinquencies fell in 8 of the 11 loan categories tracked by ABA during both the second and third quarters of 2020. The results from the two quarters were combined in this Bulletin because of pandemic-related reporting delays in the second quarter.

The composite ratio, which tracks delinquencies in eight closed-end installment loan categories, fell 101 basis points in the second quarter to 1.69% of all accounts. The composite ratio increased 15 basis points to 1.84% in the third quarter, driven by a rise in indirect auto loan delinquencies. The third quarter number remains 30 basis points below the composite ratio’s pre-COVID level of 2.14% in the fourth quarter of 2019 (See Historical Data). The ABA report defines a delinquency as a late payment that is 30 days or more overdue.

“We’ve seen continued improvement in delinquencies for most loan categories following the sharp increase when the pandemic first gripped our nation at the beginning of last year,” said ABA Senior Economist Rob Strand. “Consumers have remained cautious about spending amid economic uncertainty and have leveraged their stimulus payments to help ensure they meet their obligations.”

Delinquencies in bank cards fell 109 basis points to 1.52% of all accounts in the second quarter, the lowest level in history. They were essentially flat in the third quarter, rising one basis point to 1.53% of all accounts.

“Consumers have done an extraordinary job of spending within their means over the past decade, and they maintained that discipline throughout the recession caused by COVID-19,” Strand said. “Paired with consumer resilience, card issuers have provided assistance to those affected while implementing balanced underwriting standards to ensure consumers have the ability to repay.” (See Economic Charts)

Delinquencies in two of the three home-related categories rose in the second quarter of 2020, before falling in two categories in the third quarter. Home equity line of credit delinquencies rose 29 basis points to 1.33% of all accounts in the second quarter, and then fell 13 basis points to 1.20% in the third quarter. Home equity loan delinquencies rose 58 basis points to 4.16% of all accounts in Q2 before ticking up 1 basis point to 4.17% in the third quarter. Property improvement loan delinquencies fell 38 basis points to 1.26% of all accounts in last year’s second quarter, and then fell 16 basis points to 1.10% in the third quarter.

Delinquencies in direct auto loans (those arranged directly through a bank) fell 32 basis points to 1.70% of all accounts in Q2 before dipping an additional 2 basis points to 1.68% in the third quarter. Delinquencies in indirect auto loans (those arranged through a third party such as an auto dealer) fell 173 basis points to 1.61% of all accounts in the last year’s second quarter, before rising 48 basis points to 2.09% in the third quarter. They remain well below the category’s pre-COVID level of 2.56% in the fourth quarter of 2019.

Strand was optimistic about future delinquency levels with the economy likely to gain steam as the year progresses.

“Increased vaccinations paired with additional financial relief from Congress will provide a shot in the arm for the economy,” Strand said. “While many challenges remain, we’re optimistic that consumers will be better positioned to meet their obligations as the economy and labor market heal.”

The third 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

Q3 2020

  • Composite Ratio rose from 1.69% in Q2 2020 to 1.84% in Q3.
    • Direct auto loan delinquencies fell from 1.70% in Q2 2020 to 1.68% in Q3.
    • Home equity loan delinquencies rose from 4.16% in Q2 2020 to 4.17% in Q3.
    • Indirect auto loan delinquencies rose from 1.61% in Q2 2020 to 2.09% in Q3.
    • Marine loan delinquencies fell from 0.75% in Q2 2020 to 0.69% in Q3.
    • Mobile home delinquencies fell from 2.73% in Q2 2020 to 2.53% in Q3.
    • Personal loan delinquencies fell from 1.69% in Q2 2020 to 0.93% in Q3.
    • Property improvement loan delinquencies fell from 1.26% in Q2 2020 to 1.10% in Q3.
    • RV loan delinquencies fell from 1.14% in Q2 2020 to 1.01% in Q3.

Q2 2020

  • Composite Ratio fell from 2.70% in Q1 2020 to 1.69% in Q2.
    • Direct auto loan delinquencies fell from 2.02% in Q1 2020 to 1.70% in Q2.
    • Home equity loan delinquencies rose from 3.58% in Q1 2020 to 4.16% in Q2.
    • Indirect auto loan delinquencies fell from 3.34% in Q1 2020 to 1.61% in Q2.
    • Marine loan delinquencies fell from 0.93% in Q1 2020 to 0.75% in Q2.
    • Mobile home delinquencies fell from 3.36% in Q1 2020 to 2.73% in Q2.
    • Personal loan delinquencies rose from 1.39% in Q1 2020 to 1.69% in Q2.
    • Property improvement loan delinquencies fell from 1.64% in Q1 2020 to 1.26% in Q2.
    • RV loan delinquencies fell from 1.19% in Q1 2020 to 1.14% in Q2.

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

OPEN-END LOANS

Q3 2020

  • Bank card delinquencies rose from 1.52% in Q2 2020 to 1.53% in Q3.
  • Home equity lines of credit delinquencies fell from 1.33%.in Q2 2020 to 1.20% in Q3.
  • Non-card revolving loan delinquencies fell from 0.54% in Q2 2020 to 0.49% in Q3.

Q2 2020

  • Bank card delinquencies fell from 2.62% in Q1 2020 to 1.52% in Q2.
  • Home equity lines of credit delinquencies rose from 1.04% in Q1 2020 to 1.33% in Q2.
  • Non-card revolving loan delinquencies fell from 1.63% in Q1 2020 to 0.54% in Q2.

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.

###

About the American Bankers Association

The American Bankers Association is the voice of the nation’s $22.8 trillion banking industry, which is composed of small, regional and large banks that together employ more than 2 million people, safeguard nearly $19 trillion in deposits and extend $11 trillion in loans.

Press Contact

Mike Townsend

(202) 663-5471

Contact Mike
Useful Links

Resources for the Media

Media Contacts

All inquiries from the press can be directed to one of our press contacts.

ABA Expert Photos

Hi-Res photos for use by the press.

ABA Media Appearances

Getting the industry's message out – in print and on the air – about banks' health and lending, as well as policies that are harmful to economic recovery.

Media Credentials

Complimentary press registrations are available for select events.

Join Our Media Lists

Want to be added to our news release list? Sign up here.

RSS Feed

Get ABA press releases via RSS.