Delinquent credit card loans hit a 10-year high in the fourth quarter of 1995. An American Bankers Association economist said the rising delinquency rate is alarming.
"The last time we saw credit card delinquencies this high was the end of the last recession," said James Chessen, chief economist for the banker's group which conducts a quarterly review of loan trends.Credit card accounts that were 30 days or more overdue rose to 3.34 percent in the three months ending Dec. 31, 1995, up from 3.30 percent in the previous quarter and 2.93 percent in 1994. The fourth quarter levels matched the previous high of 3.34 percent in the first quarter of 1991.
The amount of dollars owed on the delinquent credit card accounts rose to 4.45 percent, up from 3.20 percent in 1994, the ABA said.
Chessen said the increases in late payments have slowed, but "the level of delinquencies is still alarming."
"If consumer credit growth continues to outpace disposable income, additional problems will surface," he said.
Economists blame the rising delinquencies on a variety of factors, including stagnant paychecks, banks' mass marketing of credit cards and consumer spending habits that disregard rising personal debt.
The American Bankers Association survey also found rising delinquencies in closed-end consumer installment loans, or loans with a specific payment date, which crept up to 2.12 percent or 0.14 percentage points higher than the third quarter of 1995. Delinquencies for direct auto loans rose to 1.87 percent, up 0.22 percentage points from the third quarter.