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ABA Finds Consumer Delinquencies Continue Decline in Q2


Oct 4 - Consumer delinquencies continued to decline in the second quarter of 2012, with bank card delinquencies falling to 11-year lows as consumers shore up their financial bases in an uncertain economy, according to results from the American Bankers Association’s Consumer Credit Delinquency Bulletin.

During the second quarter, bank card delinquencies dropped below 3 percent of accounts for the first time since 2001, falling 15 basis points to 2.93 percent of all accounts and well below the 15-year average of 3.91 percent.

The composite ratio, which tracks delinquencies in eight closed-end installment loan categories, fell 11 basis points to 2.24 percent of all accounts in the second quarter, below the 15-year average of 2.40 percent. The ABA report defines a delinquency as a late payment that is 30 days or more overdue.

James Chessen, ABA’s chief economist, attributed the improvement to continued efforts by consumers to manage their finances.

“Consumers are saving more and borrowing less as they work to pay down debt at a faster rate,” Chessen said. “Economic uncertainty has made consumers hesitant to take on new debt, and building a stronger financial base has become a priority.”

While Chessen found the continued decline encouraging, the report did not reflect the kind of comprehensive improvement across categories seen in the first quarter. 

“The lack of broad-based improvement gives us pause about the future,” Chessen said. “The economy experienced turbulence in the second quarter. Slow job growth and continued uncertainty means many consumers will face challenges managing their debt going forward.”

Chessen also noted that delinquencies in all three categories of home-related loans rose in the second quarter.

“While the housing market appears to have turned a corner, we are many quarters away from seeing improvement filter through to reduce home-related delinquencies,” Chessen said.

Chessen said consumers should be congratulated on their prudent and cautious behavior toward credit, particularly given the uncertainty they face.

“Good financial planning is the best defense against inevitable economic bumps in the road that lie ahead,” he said. “The economic path is far from certain as Europe continues to struggle and big decisions are needed to deal with the looming U.S. debt cliff.”

Looking forward, Chessen believes that the future outlook depends on a growing economy with stronger job growth. 

“A robust economy is the best protector against increased delinquencies,” Chessen said.           

The second quarter 2012 composite ratio is made up of the following eight closed-end loans. All figures are seasonally adjusted based upon the number of accounts.


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


For more information on budgeting, saving and managing credit, visit the ABA Education Foundation’s consumer web page at