Smart Borrower Blog

Credit Card Delinquencies Dip in 3rd Quarter


Jan 15th, 2020 @ 8:44 PM by Amber Nelson


American consumers did better at paying off their credit card debts in the 2019 third quarter, according to the American Bankers Association, but delinquencies rose on other loan categories like car loans and home equity loans.

Delinquent credit card accounts made up just 2.96% in the third quarter, down from 2.98% and still well below the pre-recession average of 4.33%. However, delinquent accounts have been on the rise for the past four years.

“It’s not unusual to see delinquencies slowly return to average levels given that they have remained so low for so long,” said ABA Chief Economist James Chessen. “The outlook remains positive as a solid job market and rising wages continue to provide a strong foundation for consumers to meet their debt obligations.”

Consumer delinquencies increased in eight of the 11 categories tracked by the ABA, including a 2-basis point rise to 1.04% of all personal loans. Home equity loans saw an increase in late payments of 16 basis points to 2.86% in the third quarter.

“Home equity loans have become a smaller share of banks’ home-related lending portfolios due to a slow recovery in the real estate market and changes in tax treatment,” Chessen explained. “The good news is that home values are rising, which boosts home equity and helps mitigate home-related loan delinquencies by incentivizing consumers to meet their obligations.”

Auto loan delinquencies also rose. Car loans made directly by banks experienced a delinquency increase of three basis points while auto loans arranged by dealers saw a 20-basis point jump in late accounts. Chessen said the rise in auto delinquencies is an indication that many consumers have overstretched their budgets when it comes to cars.

Delinquencies also increased on mobile home loans, marine loans and home equity lines of credit.

About Amber Nelson
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.

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