Late Credit Card Payments Increased in Third Quarter

When it’s hot outside, Americans don’t pay their credit card bills.  At least, that’s been the trend the past two years.

In the third quarter of 2006, the percentage of credit card payments 30 or more days past due increased to 4.57%, according to a quarterly report from the American Bankers Association.  That was the highest rate since the third quarter of 2005, when the delinquency rate stood at 4.74%.  In the second quarter of 2006, the late payment rate was 4.41%.

“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 commented in a release.  “Energy costs are still taking their toll on consumer budgets, as is the cumulative effect of the Fed’s 17 interest-rate hikes. 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.”

The report also showed that the delinquency rate on other types of loans, including auto and certain home-equity loans, rose from 1.96% in the second quarter to 2.12% in the third quarter.

Drilling down on other types of loans, the ABA released the following delinquency rate movements:

• Personal loan delinquencies increased to 1.91% from 1.86%.
• Direct auto loan delinquencies increased to 1.87% from 1.72%.
• Indirect auto loan delinquencies increased to 2.35% from 2.14%. 
• Recreational vehicle loan delinquencies increased to 0.89% from 0.79%.
• Marine loan delinquencies increased to 1.04% from 0.98%.
• Home equity loan delinquencies decreased to 1.79% from 1.89%.
• Property improvement loan delinquencies increased to 1.68% from 1.48%.
• Mobile home loan delinquencies decreased to 3.24% from 3.61%.