Consumer Delinquencies Rise in First Quarter of 2018

Bank card delinquencies began a slow return to normal levels in the first quarter of 2018 after falling across the board in the previous quarter, according to ABA’s Consumer Credit Delinquency Bulletin released today. The composite ratio, which tracks delinquencies in the closed-end installment loan categories (direct and indirect auto, home equity, marine, mobile home, personal, property improvement and RV loans) rose nine basis points to 1.73 percent of all accounts, remaining well below the 15-year average of 2.14 percent.

“Delinquencies have been so low for so long that it is not surprising to see them ease back toward more normal levels,” noted ABA Chief Economist James Chessen. “We are still well below the 15-year average, but consumers should always maintain a cautious approach to credit. More jobs and better wages continue to be the key factors in keeping delinquencies low, and the economic fundamentals remain positive.”

Delinquencies were up in nine of the 11 individual consumer loan categories tracked by ABA. Among the open-ended loan types tracked by ABA, bank card delinquencies ticked up 60 basis points to 3.06 percent of all accounts, still well below the 15-year average of 3.56 percent. Meanwhile, non-card revolving loan delinquencies fell from 1.62 percent to 1.56 percent. Delinquencies on home equity lines of credit fell from 1.16 percent to 1.14 percent.

Chessen added that he expects delinquency levels to follow the lead of the economy as consumers remain financially disciplined. “Banks will continue a conservative approach to credit extension,” he said. “And we hope that consumers will maintain their vigilant efforts to manage debt and ensure they can handle the economic conditions, year in and year out.”