Consumer Bank Card Delinquencies Are At An 18-Year Low

PartyEarth.comIn a positive sign that consumers are getting a handle on their personal finances again, the delinquency rate for bank cards has fallen to an 18-year low.

In the last quarter of 2012, bank card delinquencies fell 28 points to 2.47 per cent, according to a report issued by the American Bankers Association. For the first time since 2011, delinquencies on property improvement loans, home equity loans and home equity lines of credit declined.

Auto loans proved to be the only sore spot, rising slightly from 0.95 to 0.96 per cent.

Delinquencies in this case refers to payments that are 30 days or more past due. 

James Chessen, ABA’s chief economist, chalked up consumers’ behaviour to anxiety over economic roadblocks like the federal sequester and Fiscal Cliff.

“Make no mistake about it, a great deal of uncertainty still lingers over this economy,” Chessen said in a statement.  “Furloughs from sequestration, falling disposable income and increased health care and regulatory costs for businesses could lead to challenges in the year ahead.” 

In the meantime, conservative spending habits don’t necessarily mean bad news for the economic recovery –– it’s just the opposite.

“While this conservative approach to credit may slow economic growth in the short-term, it portends stronger, more consistent growth in the future,” Chessen said. “The sharp decline in delinquencies reinforces the notion that the economic recovery has become more self-sustaining and is on a path to increased growth.”

Here’s a breakdown of delinquency rates for consumer loans: 

  • Personal loan delinquencies fell from 2.14 per cent to 2.08 per cent.
  • Direct auto loan delinquencies rose from 0.95 per cent to 0.96 per cent.
  • Indirect auto loan delinquencies fell from 2.08 per cent to 1.85 per cent.
  • Mobile home delinquencies rose from 3.51 per cent to 3.53 per cent.
  • RV loan delinquencies held steady at 1.27 per cent (no change).
  • Marine loan delinquencies rose from 1.55 per cent to 1.57 per cent.
  • Property improvement loan delinquencies fell from  0.89 per cent to 0.83 per cent.
  • Home equity loan delinquencies  fell from 4.20 per cent to 4.03 per cent.

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