Late Payments on Credit Cards Showed Strong Decline in Fourth Quarter 2005

Late credit card payments declined in the fourth quarter of 2005, according to the American Bankers Association’s Consumer Credit Delinquency Bulletin. The number of credit card accounts 30 days or more past due decreased to 4.27 percent from 4.74 percent (seasonally adjusted) in the third quarter of 2005.

“With job growth strong over the last year and gas prices easing by year-end, the delinquency picture has brightened considerably,” said James Chessen, ABA’s chief economist.

“While this downward trend is very encouraging, the full financial effect of Katrina is still unknown. Bankers are working to help customers regain their financial footing in the aftermath of Katrina,” said Chessen. “It may be many months before its impact is reflected in the delinquency picture and will depend on the success of reconstruction efforts in those regions.”

Chessen also cited the change in the bankruptcy law as having an impact on the fall of the delinquency ratios. The Oct. 12 deadline for filing bankruptcy under the old system had a close-out sale effect on filings, wiping clean credit card debt that would normally have been reported as delinquent in the fourth quarter.

The composite ratio of closed-end installment loans fell to 2.02 percent from 2.17 percent of accounts (seasonally adjusted). This ratio tracks eight types of consumer loans:

• Personal loan delinquencies slipped to 1.97 percent from 1.98 percent.

• Direct auto loan delinquencies fell to 1.72 percent from 1.81 percent.

• Indirect auto loan delinquencies fell to 2.13 percent from 2.24 percent.

• Recreational vehicle loan delinquencies held steady at 0.90 percent

• Marine loan delinquencies fell to 1.01 percent from 1.08 percent.

• Home equity loan delinquencies fell to 2.07 from 2.33 percent.

• Property improvement loan delinquencies fell to 1.36 percent from 1.55 percent.

• Mobile home loan delinquencies rose to 3.91 percent from 3.31 percent.

Additionally, past-due payments on home equity lines of credit ? the lowest delinquency rate category ? increased to 0.51 percent from 0.46 percent.