Closed-End Delinquencies Rise in Q1 as Pandemic Began  

Consumer credit delinquencies rose in all 11 closed-end loan categories in the first quarter of 2020 as the coronavirus pandemic and subsequent economic slowdown began in the U.S., according to the American Bankers Association’s Consumer Credit Delinquency Bulletin released today. The composite ratio, which tracks delinquencies in eight closed-end installment categories, rose 56 basis points to 2.7% of all accounts.

“The data show that consumers were generally in good financial condition prior to this recession, but the pandemic’s halt on commerce led to an unprecedented increase in unemployment that made it harder for some people to meet financial obligations,” said ABA Senior Economist Rob Strand. “Banks provided unprecedented assistance to their customers during this time of need and continue to support them as the pandemic continues.”

Bank card delinquencies, meanwhile, fell 49 basis points to 2.62% of all accounts, reaching their lowest level since 2016. Strand added that as credit cards became more important during the pandemic, “consumers made sure to keep their accounts in good standing. Among the other open-end loan types tracked, home equity lines of credit delinquencies fell from 1.12% to 1.04%, while non-card revolving loan delinquencies rose from 1.61% to 1.63%.

The COVID-19 pandemic will continue to affect delinquency levels in the months ahead, Strand noted. “The pandemic has had a negative impact on consumer finances, and we expect delinquencies will reflect that in the months ahead. With more businesses reopening, more people are slowly getting back to work, which will enable them to better meet their obligations. As always, we urge those facing financial hardships to reach out to their banks as soon as they can for assistance.”