After a marked improvement in the first quarter, the credit card delinquency rate shot back up in the second quarter to just 3 basis points short of the record high, the American Bankers Association said Wednesday.
On June 30, 3.69% of card accounts at member banks in the ABA survey were at least 30 days past due. That compared with 3.51% in the first quarter, the 3.72% record set at the end of last year, and 3.66% in the second quarter of 1996.
The deterioration-also evident in the ABA's composite index of several types of closed-end loans-could dampen recent optimism that consumer delinquencies and associated chargeoffs had neared or passed a cyclical peak. But the association's chief economist, James Chessen, said volatility is to be expected.
"Delinquencies are going to bounce around over the next couple of quarters," he said. "We've reached a high plateau and will stay there for a period of time. We're certainly not out of the woods."
The closed-end composite index climbed to 2.55% of accounts in the second quarter, from 2.47% in the first and 2.32% a year earlier. The composite has been up in every quarter but one since mid-1994, but it has not returned to the levels of 1991-92, several of them above 2.70%.
As a percentage of dollars outstanding, the composite improved to 1.93%, from 1.95%, as did the bank card ratio, to 5.24%, from 5.43%.
Other key categories improved in the second quarter: home equity loans to 1.32%, from 1.38%; home equity lines of credit to 1.04%, from 1.20%; direct auto loans to 2.07%, from 2.10%. But indirect auto delinquencies rose to 2.74%, from 2.55%.
Within the composite index, June 30 readings included: personal loans, 3.19%; mobile home loans, 4.66%; recreational vehicle loans, 2.53%; and property improvement loans, 2.59%.
Economists said they continue to be puzzled by the extent of credit problems at a time of general economic strength with low unemployment.
Mr. Chessen blamed the "ease of declaring bankruptcy."
Warren G. Heller, research director of Veribanc Inc., Wakefield, Mass., drew a different conclusion, saying "more people are being sucked into the hole" of easy credit.
Mr. Heller's second-quarter study of serious delinquencies-accounts more than 90 days past due-showed almost no change from the first quarter. The ABA's broader-based numbers "would imply that the newly delinquent (category) has risen, and that's unfortunate," Mr. Heller said.
According to the Federal Reserve Board, outstanding revolving credit balances hit $521.9 billion at the end of July. In the 12 months ending June 30, a record 1.26 million people filed for personal bankruptcy, according to the Administrative Office of the U.S. Courts.
Some economists said the bankruptcy and delinquency numbers are poised to improve as banks have been steadily tightening their lending criteria.
James Annable, chief economist at First Chicago NBD Corp., saw reasons for encouragement.
"The delinquency problem is topping out," he said. "Before you didn't know where it was going to go, but now it looks like a manageable problem."
