(PR NEWSWIRE) Late Card Payments Up for Fourth Quarter 2000; Consumers React to Slowing U.S.
Economy
WASHINGTON, March 15 /PRNewswire/ -- The number of credit card bills paid
late increased in the fourth quarter, signaling that some consumers are
feeling the effects of the nation's slowing economy, according to the American
Bankers Association (ABA) Consumer Credit Delinquency Bulletin.
The number of credit card bills paid late increased to 3.34 percent of all
accounts (seasonally adjusted), compared to 3.21 percent in the previous
quarter, and 3.22 percent a year earlier (fourth quarter 1999). Fourth
quarter credit card delinquencies, based on total dollars outstanding, was
4.25 percent (not seasonally adjusted), up from the previous quarter's 3.93
percent but lower than 4.28 percent in the same period last year.
"As we expected, the number of delinquent accounts has increased as the
economy has slowed," said James Chessen, ABA chief economist. "Consumers who
are carrying a higher debt load are most likely to feel the effects of an
economic slowdown."
"Nonetheless, the delinquency ratio remains within the average rate we've
seen over the past five years," said Chessen.
The number of delinquent accounts for ABA's composite ratio of closed-end
installment loans rose to 2.40 percent of all accounts in the fourth quarter
of 2000, compared to 2.32 percent the previous quarter. The ratio-which
tracks eight types of closed-end consumer installment loans, including auto,
home equity and personal loans-is higher than it was a year earlier (2.27
percent in the fourth quarter 1999). A loan payment is considered delinquent
when it is 30 days or more overdue.
Direct auto loan late payments increased to 2.17 percent in the fourth
quarter of 2000 from 2.12 in the third quarter. Delinquencies for indirect
auto loans increased slightly to 2.49 percent, up from 2.46 percent in the
third quarter of 2000.
Delinquencies on home equity loans, based on the number of accounts,
increased from 1.16 percent to 1.46 percent in the fourth quarter. Late
payments on home equity lines of credit also increased, from 0.71 percent to
0.81 percent. Home equity numbers are not seasonally adjusted. Home equity
lines continue to be the loan category with the lowest delinquencies.
"During the fourth quarter of 2000, banks remained conservative in their
underwriting standards recognizing the debt burden facing some consumers,"
said Chessen. "Still, the Federal Reserve's lowering of interest rates early
this year should ease the consumer debt-service burden and encourage small
businesses to borrow for expansion, which helps keep employment up."
The ABA advises consumers to review their finances every year. ABA offers
the following tips for consumers who might be having trouble paying down their
debts.
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.
Solving debt problems:
* 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.
The ABA 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. ABA can be
found on the World Wide Web at aba.com .
SOURCE American Bankers Association
-0- 03/15/2001
/NOTE TO EDITORS: For additional information on the ABA Consumer Credit
Delinquency Historical Fact Sheet, please contact Julie Malveaux,
202-663-5466, or go to aba.com
/CONTACT: Julie Malveaux of the American Bankers Association,
202-663-5466/
/Web site: aba.com
CO: American Bankers Association
ST: District of Columbia
IN: FIN CPR MLM
SU: ECO
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