Magazine article American Banker

Card Delinquency Rates Fall Again: ABA

Magazine article American Banker

Card Delinquency Rates Fall Again: ABA

Article excerpt

Byline: Kevin Wack

Consumers continued to pay off their credit cards at historically high rates in the third quarter, with the delinquency rate hitting an 18-year low, according to the American Bankers Association. Consumer card delinquencies fell to 2.75% during the three-month period, a seasonally adjusted decline of 0.18 percentage points from the previous quarter, and their lowest level since 1994, the banking trade group found. The falling delinquency rate is part of a broader trend involving consumer debt. For the third quarter, a composite ratio of delinquencies on closed-end consumer loans fell to 2.16%, a drop of 0.08 percentage points. James Chessen, the ABA's chief economist, attributed the declines to the continuation of three existing trends: consumers rebuilding their balance sheets following the financial crisis, banks aggressively charging off bad loans, and banks' cautious selection of new loans. "I think banks have been careful as they underwrite new credits not to add significant risks to their portfolios," Chessen said in an interview. With card delinquency rates remaining depressed for longer than many expected, the question now is how low can they can go. "I'm a bit surprised that the credit-card delinquencies continue to fall," Chessen said. "They're significantly below the 15-year average, and it's hard to see them falling much below that." Third-quarter delinquency rates did increase in certain categories, according to the ABA report, which is based on a survey of banks. …

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