Consumer Delinquencies Decline to Record Low in Second Quarter of 2021

Consumer credit delinquencies fell to a record low in the second quarter of 2021 as the economy continued to rebound, according to the American Bankers Association’s Consumer Credit Delinquency Bulletin released today. The composite ratio, which tracks delinquencies in eight closed-end installment loan categories (direct and indirect auto, home equity, marine, mobile home, personal, property improvement and RV loans) fell 69 basis points to 1.21% of all accounts. Delinquencies in credit cards issued by banks fell 67 basis points to 1.38% of all accounts in the second quarter, the lowest level for the category since ABA began tracking it in 1993.

“Consumers’ financial health generally continued to strengthen in the second quarter due to the robust jobs recovery and another round of federal stimulus payments,” said ABA Chief Economist Sayee Srinivasan. “These factors helped households shore up savings and meet their financial obligations.”

Among the open-ended loan types tracked, bank card delinquencies fell from 2.05% to 1.38%, while non-card revolving loan delinquencies declined from 4.77% to 4.13%. Delinquencies on home equity lines of credit fell from 1.70% to 1.51%.

Srinivasan noted that the COVID-19 pandemic remains a significant economic factor to watch. “While the second quarter delinquency data was extremely promising, the Delta variant has added volatility to the economic outlook since then,” he said. “Many consumers continue to struggle even as the economy finds its footing, but banks remain dedicated to helping their customers navigate their financial challenges”