Consumers continued to make timely payments on a variety of bank loans in the third quarter of 2012, according to the Consumer Credit Delinquency Bulletin published by the American Bankers Association, or ABA, a banking industry group in Washington, D.C. The trend appears to be a win-win for consumers and banks.
Delinquencies on bank-issued credit cards dropped to just 2.75 percent of all such accounts, the lowest level since 1994 and well below the 15-year average of 3.89 percent. A delinquency was defined as a payment that was 30 days or more overdue.
A composite ratio that tracks delinquencies in eight loan categories fell even lower to just 2.16 percent in the third quarter, also well below the 15-year average of 2.4 percent. The composite includes personal loans, auto loans and home-related loans.
In a statement, ABA Chief Economist James Chessen attributed the improvement to consumers' ongoing efforts to better manage their finances.
"Consumers are paying close attention to their finances as they continue to pay down debt in an uncertain economy. This conservative approach has allowed them to better manage their debt and better position themselves for the future," Chessen said.
Whether the trend will continue isn't clear, in part because delinquencies in some loan categories have hit historical lows that leave little room for further improvement. Slow job growth, continued economic uncertainty, weak consumer confidence and the expiration of the payroll tax break also could result in rising delinquencies this year.
"Confidence has already fallen sharply and many consumers have responded by closing their wallets," Chessen said.
For consumers struggling to repaid their loans, the ABA offered these brief suggestions.
- Take action sooner rather than later.
- Talk with creditors.
- Don't charge more purchases.
- Try to avoid bankruptcy.
- Contact a consumer credit counseling service.
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