Consumer Delinquencies Hold Steady in Second Quarter of 2018

Bank card delinquencies fell in the second quarter of 2018 after creeping up in the previous quarter, according to the American Bankers Association’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) ticked up 3 basis points to 1.75 percent of all accounts, remaining well below the 15-year average of 2.13 percent.

“As the economy keeps humming along, delinquencies have stayed at very low levels,” said ABA Chief Economist James Chessen. “Overall, consumer financial health has been excellent. Jobs are plentiful, wages are rising and savings rates have held steady at elevated levels, which paints a vivid picture conducive to low delinquencies.  While delinquencies have held steady, the holiday season is fast approaching and a watchful eye on budgets is the key to successfully managing debt obligations.”

Delinquencies were down or held steady in 8 of the 11 categories tracked by ABA, while the other two edged up by just 1 basis point. Among the open-ended loan types tracked, bank card delinquencies fell 13 basis points to 2.93 percent of all accounts, well below the 15-year average of 3.55 percent. Meanwhile, non-card revolving loan delinquencies ticked up from 1.56 percent to 1.57 percent. Delinquencies on home equity lines of credit rose from 1.14 percent to 1.15 percent.

Chessen added that he expects the robust employment outlook to help keep delinquency levels low in the months ahead. “We expect the strong job market to continue over the next year, which should improve household finances and help keep delinquencies in check,” Chessen said. “As always, judicious spending is the key to preventing delinquencies.”


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