Consumer credit quality has worsened for the third consecutive quarter, the American Bankers Association said.

The association's seasonally adjusted composite index of loan delinquencies showed 1.95% of participating banks' closed-end consumer loan accounts were at least 30 days past due as of June 30.

The ratio was 13 basis points higher than at the end of the first quarter, and 24 basis points higher than at midyear 1994, the ABA said this week.

The level of delinquent credit card accounts, which are not included in the closed-end credit index, moved up eight basis points for the quarter and 70 basis points over a year to 3.26% at the end of the second quarter.

"I find it worrisome that consumer debt levels are rising, especially in comparison to income," said James Chessen, the ABA's chief economist.

"After the 1990 recession, consumers went on a debt-reducing diet," he said. "Now they're gaining back the pounds."

But Allen Sinai, chief economist at Lehman Brothers in New York, said the rise in delinquencies "was to be expected in the active lending- borrowing market we have. Against the backdrop of what is fundamentally a still healthy environment (in terms of household finances), this is not a cause for alarm."

Before the second-quarter figures were released, the ABA's consumer credit delinquency index had not risen in three consecutive quarters since 1991.

The Federal Reserve Board said recently that consumer installment credit expanded at a 10.9% annual rate to hit $979.6 billion at the end of July. The ABA said banks held about half of that credit.

"I think the most troubling statistic is bank card delinquencies, which are at nearly historically high levels," said Mr. Chessen. "It scares the life out of me because bank cards are so easy to use and are unsecured."

According to the report, bank card delinquencies have been higher only three times in the past 10 years: 3.28% in the second quarter of 1986, 3.34% in the first quarter of 1991, and 3.29% in the fourth quarter of 1991.

Several industry watchers suggested that cobranded cards that feature bonuses like frequent flyer miles have caused more consumers to use credit cards for groceries and other convenience purchases.

"I have heard the anecdotal evidence of people using their cards for convenience purchases just to get the perk," said Ruth Susswein, executive director of Bankcard Holders of America, a Herndon, Va.-based consumer education group. "This troubles me because people who carry balances still make up more than two-thirds of the cardholding public."

Ms. Susswein suggested that the banks are promoting such transactional uses of credit cards, a practice that she warned could topple many household finances.

Mr. Chessen predicted that credit card issuers - and eventually other lenders - will move to tighten credit standards in the coming months, but others questioned that strategy.

"More and more marginal borrowers are being brought into the credit arena, and at the same time the good borrowers are being given larger and larger credit limits," said Edward E. Furash, chairman of Furash & Co., a Washington-based consulting firm. "And the issuers are still at it - expanding lines of credit for the Christmas season."

Mr. Furash said he was unsure lenders would tighten credit standards, but he noted that they have been concentrating on collecting arrears more promptly than in years past.

"It is not an out-of-control situation, and I don't think the lenders want it to become an out-of-control situation," he said.

However, Mr. Furash, echoed by economists, expressed concern that a sicker economy could make for an ugly consumer loan situation.

"Too many people in our economy live only one or two paychecks away from the brink," he said.

The ABA bulletin showed late payments on direct auto loans surging 48 basis points in the last quarter to 1.93%, while indirect auto loan payments were up three basis points to 1.79%.

"This statistic is obviously disturbing because auto sales have been so important in driving the economy for the last year," said the ABA's Mr. Chessen.

The lowest rate of delinquency was reported on open-end home equity loans, which stood at 0.75%, up from 0.70% three months earlier. Closed-end home equity loans saw a decrease in tardiness from 1.25% to 1.20%.

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