Late payments on credit card accounts rose slightly in the first quarter, but the percentage of dollars tied to these accounts dropped to a five-year low, according to the American Bankers Association's quarterly bulletin on consumer loan delinquencies.
In the quarter 3.28% of credit card accounts were 30 days or more overdue, the ABA reported. This was a slight increase from the 3.22% rate in the previous quarter but a substantial decline from the 3.58% of the year-earlier quarter.
The dollar amount of loans in delinquent bank card accounts was 3.94% of total card debt, down from 4.28% in the fourth quarter of 1999. The first-quarter figure was the lowest this measure has been since the second quarter of 1995.
In lending categories other than credit cards, the percentage of late debt payments edged downward. The ABA's composite index, which measures eight types of closed-end loans, was at 2.14% in the first quarter, down from 2.27% in the fourth quarter. The delinquent dollars rate corroborated the trend, reaching a five-year low at 1.55%, from 1.98% in the fourth quarter.
"The good news is that we're well off the peak of delinquency," said James Chessen, chief economist for the ABA in Washington. He said he was "particularly comforted" by the latest figures, which he said indicated "an economy where people have good jobs, higher incomes, and are managing their finances better."
Mr. Chessen said banks' increasingly conservative lending practices are clearly paying off and the survey results should reassure bankers that "caution is good."
Late payments on home equity loans also dropped, to 1.13% in the first quarter from 1.29% in the fourth. The first-quarter figure was the lowest since the ABA began tracking these data in the fourth quarter of 1983.
The decline may reflect the high number of home equity loans whose interest rates are locked in, Mr. Chessen said. The same explanation may also account for the slight increase in late payments on home equity lines of credit, which are affected by interest rate hikes. Late payments on home equity lines rose to 0.68% in the first quarter, from 0.63% in the prior quarter.
The decrease in delinquencies and in dollars at stake will probably tempt the Fed to raise interest rates, Mr. Chessen said, but the effects will probably be absorbed by the overall decline. "The worry will come as the economy shifts into lower gear," he said. "But the more signs of a slowing economy, the more vigilant banks become."