Credit card delinquencies rose to a record high in the second quarter, pacing a broad-based deterioration in consumer credit quality, according to American Bankers Association statistics.

As of the end of June, 3.66% of credit card accounts were at least 30 days past due, the ABA said Tuesday.

Climbing 13 basis points in three months, the credit card indicator paralleled a composite index based on eight types of closed-end bank credit, which jumped to 2.32% from 2.14%.

In May and June, the delinquency measure rose for each type of loan in the ABA study. (See graph on page 15.) But few of the increases were close to that in credit cards.

In delinquencies as a percentage of borrowed dollars, bank cards rose to 4.61% in June from 4.51% in April, and the closed-end summary index jumped to 1.72% from 1.58%.

The delinquencies on card loans, remaining significantly higher than all other categories, have been up seven consecutive quarters and have never been higher since the ABA began its tracking in 1974, said James Chessen, the association's chief economist.

"We have done it to ourselves by making more credit available to consumers," said Irving Levin, chief executive of Renaissance BankCard Services. "We are now dealing with the sins that we committed in the past."

"Consumers need to think about the credit that they are taking on and whether or not they can repay it," Mr. Chessen said. "The good news is that the banking industry has shown restraint in making loans since the beginning of this year."

Sung Won Sohn, senior vice president and chief economist at Norwest Corp., said many consumers who have gotten caught in a bind are making ends meet with easy credit-card loans.

"Higher delinquencies are a combination of a crushing debt burden and reduced real income," Mr. Sohn said.

"The real median income of the average American is decreasing; income adjusted for inflation is decreasing," he added. "Take into account taxes, Medicare, and Social Security (contributions) that have become more burdensome, and the figures look even worse."

Mr. Chessen said the constructive actions by banks will take several quarters to show up in delinquency readings.

"I expect the figures to increase over the next several quarters, but this is not an indication of something terrible happening," he said. "The increase is a natural evolution of delinquencies and the cycle that we are in."

Although industry observers fully expect a turnaround, they attributed the current rise in late payments, in part, to the recent increase in bankruptcy declarations. It seems anomalous in a growing economy with relatively low unemployment.

James Annable, chief economist of First Chicago NBD Corp., said one factor is "the reduced social stigma associated with bankruptcies."

"There has been a most astounding upward trend in personal bankruptcies over the past couple of years," said Lawrence Chimerine, managing director and chief economist at the Economic Strategy Institute and consulting economist to MasterCard International. "Bankruptcy used to be a last resort; it is now a first option," he said.

Mr. Chimerine said the many contributing factors include family breakups, large medical bills, and corporate downsizing.

Jeff Miller, senior vice president of consumer credit operations at Marine Midland Bank, said the ABA data are in line with his results.

"Marine Midland is about 15% below the industry average," Mr. Miller said, "but we are also looking at our underwriting strategies.

"Bankruptcy rates are 25% to 30% higher than they were in 1995," he added. "We have been told by both Visa and MasterCard that delinquency rates will continue their rise through 1997."

From January to July, bankruptcy filings stood at 617,919, compared with 488,312 for the same period in 1995. Visa U.S.A. predicts this figure will hit one million by yearend.

Industry analysts agree that banks are becoming more prudent in consumer lending, but opinions vary on when this renewed caution will slow the delinquency trend.

"The highest delinquencies usually occur between the 18th and 36th month of the life of a loan, so I wouldn't expect to see any significant change before 1998," said Mr. Miller.

"Banks and issuers have become more cautious with regard to credit cards, but not with regard to other consumer loans such as auto and home equity loans," Mr. Sohn said. "I think that it will get worse before it gets better. We might see a recession in the next four years."

A report by Fitch Investors Service indicated that with consumer chargeoffs at a five-year peak, this deterioration will continue through the end of 1996.

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