Late Credit Card Payments Fall Slightly in 2Q07
The American Bankers Association reports today that credit card loan delinquencies fell slightly in the second quarter of 2007, according to its Consumer Credit Delinquency Bulletin. "Late payments on credit cards were 4.39 percent of all accounts in the second quarter, compared to 4.41 percent in the first quarter of this year (seasonally adjusted). The ABA report defines late payments as 30 days or more overdue."
“Consumers fared reasonably well in the second quarter despite turmoil in the subprime mortgage market” said James Chessen, ABA chief economist. “Relatively good numbers in income and job growth have helped to limit spillover to other consumer loans.”
The fact that credit card repayment rates led mortgage repayment rates may seem to go against conventional wisdom, according to Chessen. But consumers’ priorities can shift, especially for borrowers who face a one-two punch: higher interest payments on their adjustable rate mortgages and declining equity as their home prices fall.
“Not surprisingly, customers may feel helpless when faced with a mortgage reset they can’t afford, but they still want to keep up with other payments,” said Chessen. “People need to pay for gas and their cars so that they can get to work.”
The news for home equity loans was mixed. Delinquencies for home equity lines of credit – the lowest delinquency rate category – increased to 0.77 percent from 0.60 percent. But closed-end home equity loan delinquencies decreased to 1.99 percent from 2.15 percent.
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