Delinquencies Dropped in all Categories, Including Credit Cards in Q4 2004

WASHINGTON ? Consumer credit card delinquencies improved in the fourth quarter of 2004 along with every consumer loan category, according to the American Bankers Association?s latest Consumer Credit Delinquency Bulletin.

“Such an impressive improvement is a rare event,” said James Chessen, ABA?s chief economist. “We haven?t seen an across-the-board decline in delinquencies since 1983.” ABA has tracked consumer loan delinquencies for more than 30 years.

Based on the number of credit card accounts, 4.20 percent (seasonally adjusted) were overdue in the fourth quarter, a decrease from 4.26 percent in the third quarter. Additionally, past-due payments on home equity lines of credit ? the lowest delinquency rate category ? decreased to 0.33 percent from 0.38 percent.

Chessen cited bright spots in the overall economic picture that lead to the improvements in the fourth quarter of 2004. “Strong job growth combined with rising incomes and wealth throughout 2004 made it easier for consumers to make timely loan payments in the fourth quarter.”

“We are optimistic that consumers will continue to effectively manage their financial obligations despite higher gas prices and the Federal Reserve?s plans to continue raising interest rates,” Chessen said.

The composite ratio of closed-end installment loans 30 days or more past due decreased to 1.68 percent from 1.90 percent of all accounts (seasonally adjusted). The composite ratio tracks eight types of closed-end consumer installment loans:

• Direct auto loans decreased to 2.09 percent from 2.29 percent.
• Indirect auto loans decreased to 1.35 percent from 1.59 percent.
• Home equity loan delinquencies decreased to 2.37 from 2.82 percent.
• Marine loan delinquencies decreased to 1.04 percent from 1.18 percent.
• Mobile home loan delinquencies decreased to 5.03 percent from 5.20 percent.
• Personal loan delinquencies decreased to 1.90 percent from 1.96 percent.
• Property improvement loan delinquencies decreased to 1.36 percent from 1.44 percent.
• Recreational vehicle loan delinquencies decreased to 0.87 percent from 0.94 percent.