Delinquencies declined nearly across the board in the second quarter, falling in nine out of 11 categories as the economy improved and consumers responsibly managed their finances, according to results from the American Bankers Association’s Consumer Credit Delinquency Bulletin.

The composite ratio, which tracks delinquencies in eight closed-end installment loan categories, fell 6 basis points to 1.57 percent of all accounts – a record low that is well under the 15-year average of 2.32 percent.  (See Historical Graphic.)  The ABA report defines a delinquency as a late payment that is 30 days or more overdue.

“Strong job growth, rising income, low interest rates and falling debt levels have led to consumers having a greater capacity to repay debt,” said James Chessen, ABA’s chief economist.  “Consumers have made great strides since the recession, with a focus on deleveraging and disciplined financial management that has kept debt levels under control.”

Bank card delinquencies were essentially flat following a significant first-quarter decline, falling 1 basis point to 2.43 percent of all accounts in the second quarter.  They remain well below their 15-year average of 3.79 percent.

“Consumers are thinking twice before increasing their level of debt, with many using credit cards as a payment vehicle rather than a tool to finance purchases,” said Chessen.  “The economy’s slow march forward has put consumers in a better financial position to meet their obligations, and banks will continue to extend credit to a growing number of qualified borrowers as the economy improves.”
Chessen noted that delinquencies in all three home-related categories – property improvement loans, home equity loans and home equity lines of credit – fell in the second quarter.

“Home-related delinquencies are moving in the right direction, mirroring the slow recovery in housing,” said Chessen.  “Rising home prices in many communities have helped shore up the value of many families’ most important investment, helping to rebuild wealth and ease pressure on consumers.”

Chessen noted that the fall in home equity line delinquencies is a positive sign before many of these loans become fully amortizing over the next few years.

“Banks are proactively working with home equity customers to ensure they are able to continue to meet their obligations going forward,” said Chessen.

Chessen noted that delinquencies are likely to remain close to their current levels in the months ahead amid favorable economic conditions and prudent financial management by consumers.

“Continued job growth is the most important factor behind keeping delinquencies at these historically low rates,” Chessen said.   “Getting more people back to work and increasing household income is critical to a healthy economy and the ability to meet financial obligations.  While challenges clearly remain, continued vigilance by consumers in managing their debt is the best protection against rising delinquencies.”  (See Economic Charts)

The second quarter 2014 composite ratio is made up of the following eight closed-end loans.  All figures are seasonally adjusted based upon the number of accounts.


  • Personal loan delinquencies fell from 1.73 percent to 1.62 percent.
  • Direct auto loan delinquencies fell from 0.76 percent to 0.72 percent.
  • Indirect auto loan delinquencies fell from 1.74 percent to 1.55 percent.
  • Mobile home delinquencies rose from 3.37 percent to 3.56 percent.
  • RV loan delinquencies fell from at 1.14 percent to 1.09 percent.
  • Marine loan delinquencies fell from 1.42 percent to 1.34 percent.
  • Property improvement loan delinquencies fell from  1.00 percent to 0.97 percent.
  • Home equity loan delinquencies fell from 3.57 percent to 3.36 percent.

In addition, ABA tracks three open-end loan categories:


  • Bank card delinquencies fell from 2.44 percent to 2.43 percent.
  • Home equity lines of credit delinquencies fell from 1.57 percent to 1.50 percent.
  • Non-card revolving loan delinquencies rose from 1.79 percent to 1.92 percent.

The American Bankers Association is the voice of the nation’s $15 trillion banking industry, which is composed of small, regional and large banks that together employ more than 2 million people, safeguard $11 trillion in deposits and extend more than $8 trillion in loans.

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