Installment loan and bank card delinquencies increased in the first quarter, according to results from the American Bankers Association’s (ABA) Consumer Credit Delinquency Bulletin.
The composite ratio, which tracks delinquencies in eight closed-end installment loan categories, jumped 9 basis points to 1.73 percent of all accounts. A delinquency is considered a late payment that’s more than 30 days overdue. While up in the first quarter, it remains below the 15-year average of 2.14 percent.
“Delinquencies have been so low for so long that it is not surprising to see them ease back toward more normal levels,” James Chessen, ABA’s chief economist, said. “We are still well below the 15-year average, but consumers should always maintain a cautious approach to credit. More jobs and better wages continue to be the key factors in keeping delinquencies low, and the economic fundamentals remain positive. Solid budget management remains very important, particularly with higher electric bills to keep cool in the summer heat and rising gas prices.”
Delinquencies in bank cards — credit cards provided by banks — increased 60 basis point increase to 3.06 percent of all accounts.
“Bank card delinquencies have been near historical lows for five years as consumers have done a great job managing their levels of debt,” Chessen said. “The ratio of credit card debt to disposable income remains low and is nowhere near pre-crisis levels.”
Further, home equity loan delinquencies rose 3 basis points to 2.31 percent of all accounts, while property improvement loan delinquencies rose 12 basis points to 1.16 percent of all accounts. In addition, delinquencies in direct auto loans rose 3 basis points to 1.10 percent of all accounts, while delinquencies in indirect auto loans rose 15 basis points to 1.93 percent of all accounts.
The only category to see a decline was home equity line of credit delinquencies, which fell 2 basis points to 1.14 percent of all accounts.
“Banks will continue a conservative approach to credit extension, and we hope that consumers will maintain their vigilant efforts to manage debt and ensure they can handle the economic conditions, year in and year out,” Chessen said.