Credit card delinquencies rise in fourth-quarter 2003

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All major closed-end consumer loan delinquencies decreased, while the number of past-due credit card accounts rose to an all-time high in the fourth quarter of 2003, according to the latest American Bankers Association Consumer Credit Delinquency Bulletin.|ret||ret||tab|

"It was a rare combination where credit card delinquencies increased as all other consumer lending delinquencies declined," ABA chief economist James Chessen said in a March 23 news release. "It took the gloss off of what would be outstanding news." |ret||ret||tab|

The composite ratio of closed-end installment loans 30 days or more past due dropped to 1.89 percent of all accounts (seasonally adjusted) the lowest it has been since 1995. In the third quarter of 2003 the ratio was at 2.14 percent. |ret||ret||tab|

The composite ratio tracks eight closed-end consumer installment loans, including personal, auto and home equity. |ret||ret||tab|

Credit card delinquencies rose significantly to 4.43 percent of accounts (seasonally adjusted) in the fourth quarter, surpassing the previous record of 4.09 percent in the third quarter. |ret||ret||tab|

Based on total dollars outstanding, bankcard delinquencies increased to 4.92 percent from 4.66 percent (not seasonally adjusted), which is below the record level of 5.45 percent set in 1996.|ret||ret||tab|

Chessen noted that credit cards often provide the financial bridge for those who are between jobs. Weak job creation kept credit card delinquencies at persistently high levels. |ret||ret||tab|

The average length of unemployment remained near 20 weeks in the fourth quarter, energy costs rose and, on average, financial obligations remained above 18 percent of personal income. |ret||ret||tab|

"Clearly, the improving economy has not yet touched all individuals, particularly those who continue to look for work and may be relying on credit cards to meet their daily living expenses. The financial strain is increasing as the time between jobs continues to lengthen," Chessen said. |ret||ret||tab|

Personal loan delinquencies decreased to 2.68 percent, from 2.75 percent. |ret||ret||tab|

Late payments on auto loans also decreased. Indirect auto loans declined to 1.55 percent, from 1.80 percent, and direct auto loans dropped to 2.36 percent, from 2.46 percent. |ret||ret||tab|

Home equity loan delinquencies declined slightly to 2.5 percent, from 2.52 percent. Mobile home loan delinquencies decreased to 5.56 percent, from 6 percent. |ret||ret||tab|

Past-due payments on home equity lines of credit the lowest delinquency rate category decreased to 0.43 percent from 0.52 percent.|ret||ret||tab|

The ABA advises consumers to review their finances every year. |ret||ret||tab|

ABA offers the following tips for consumers who might be having trouble paying down their debts. |ret||ret||tab|

Warning signs of being overextended on credit include:|ret||ret||tab|

paying only the minimum payment month after month;|ret||ret||tab|

being out of cash constantly;|ret||ret||tab|

being late on important payments, such as rent or mortgage;|ret||ret||tab|

taking longer and longer to pay off balances; and|ret||ret||tab|

borrowing from one lender to pay another. |ret||ret||tab|

There are ways to solve debt problems, including:|ret||ret||tab|

talk with creditors hiding only makes the problem worse;|ret||ret||tab|

don't charge more purchases until your problems are solved;|ret||ret||tab|

avoid bankruptcy it's a short-term solution with long-term consequences; and|ret||ret||tab|

contact Consumer Credit Counseling Services at 800-388-2227. |ret||ret||tab|

For more information on budgeting, saving and managing credit, visit the ABA Education Foundation's Consumer Connection at www.aba.com.|ret||ret||tab|

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