Credit card, loan delinquencies inch up

Credit card and personal loan delinquencies ticked up slightly in the final three months of last year but remain near record lows, a new report shows.

{mosads}Late payments on bank cards rose to 2.52 percent from 2.51 percent and rose to 1.54 percent from 1.51 percent on closed-end loans, which includes car notes, in a sign that consumers are keeping a tight rein on their finances, the American Bankers Association reported.

“Even as incomes rise and the economy improves, consumers continue to take a judicious approach to managing their finances,” said James Chessen, ABA’s chief economist.

“Consumers have regained confidence since the last recession, but they remain careful about taking on additional debt,” he said.

Credit card delinquencies remain well below their 15-year average of 3.75 percent and closed-end installment loan delinquencies averaged 2.29 percent over that period.

Overall, delinquencies fell in seven of the 11 individual loan categories in the October-December period.

A delinquency is a late payment that is overdue by 30 days or more.

“As credit access and consumer spending increase, the overwhelming majority of cardholders continue to pay off or pay down their balances month after month,” Chessen said.

“We expect this trend to continue as consumers remain laser-focused on keeping debt at manageable levels,” he said.

Delinquencies in two of the three home-related categories — home equity loans and home equity lines of credit — fell in the fourth quarter, falling to 3.23 percent and 1.48 percent, respectively.

Delinquencies for property improvement loans increased from 0.82 to 0.93 percent.

“Home equity delinquencies are trending in the right direction as the housing market continues its slow march toward recovery,” Chessen said.

Chessen said that a healthy economy and continued financial discipline among consumers bode well for future delinquency rates.

“The economy is better, incomes are higher and the risk of lending is lower,” Chessen said.

“People have a greater capacity to repay their debts, and we expect delinquencies will continue to fluctuate near these low levels for the foreseeable future.”