Delinquencies on all U.S. credit card debt soared to a record 6.60%

July 7, 2009 by · Leave a Comment
Filed under: Economic News 

The market is down at the time of this writing.  With rising unemployment, foreclosures are sure to continue and this does not bode well for consumer debt either.   In this article they mention a rising of late payments on home equity lines of credit as well.  I am sorry to say, but until we can stop losing so many jobs and put a bottom in the job market, these trends will continue.  You have to have income to support debt service and asset prices at what ever level they were before the downturn started.  That is how a market-based economy works and that is not going to change here.  My advice is to keep yourself protected and continue to reduce your expenses and debt.

News (Reuters):

Soaring U.S. unemployment and a shrinking economy drove delinquencies on credit card debt and home equity loans to all-time highs in the first quarter as a record number of cash-strapped consumers fell behind on their bills.

Delinquencies on the value of all card debt soared to a record 6.60 percent from 5.52 percent in the fourth quarter as more cardholders relied on plastic to meet day-to-day expenses, the American Bankers Association said.

Late payments on home equity loans rose to 3.52 percent from 3.03 percent, and on home equity lines of credit climbed to 1.89 percent from 1.46 percent.

A broader gauge showing late payments on eight categories of loans rose for a fourth straight quarter to a new record, edging up to 3.23 percent from 3.22 percent. That rate actually understates consumer pain because it excludes credit cards. The ABA tracks loan payments that are at least 30 days late.

“The biggest driver is job losses,” ABA Chief Economist James Chessen said in an interview. “When people lose their jobs or work fewer hours, it makes it that much harder to meet their obligations. Unfortunately, we’re going to see higher job losses in the next year, and I expect elevated delinquencies.”

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