For the first time in two years, delinquency rates have improved on credit card and closed-end consumer loans, the American Bankers Association said Wednesday.

At the end of September, 3.48% of credit card accounts were at least 30 days past due, down from the record high of 3.66% in the second quarter, the ABA said.

The composite index, which, like the credit card reading, is seasonally adjusted, fell three basis points, to 2.29%. That was identical to the rate on indirect auto loans - those made through dealers - which improved by 19 basis points.

The last time the key composite and card indexes improved was in the third quarter of 1994. The composite fell 5 basis points, to 1.66%, and credit card delinquencies 12 basis points, to 2.44%.

In the latest quarter, several delinquency categories had setbacks: auto loans made directly by banks jumped to 1.95% from 1.77%. Open-end home equity delinquences rose to 1.29% from 1.25%, and delinquent personal loans to 3.15% from 2.97%.

"The good news is the number of people that are having difficulty meeting their obligations has dropped significantly," said James Chessen, the ABA's chief economist. "My hope is that we're at a turning point in the delinquency cycle and things will continue to improve."

However, he said he was worried that "this is the pause to refresh before Christmas spending. That means the first quarter of next year, and into the second quarter, may be less than rosy in terms of delinquencies."

The drop in the key delinquency measures comes amid wide-ranging concern among lenders, consumer groups, and legislators about consumers' ability to pay off credit card loans. With the earlier uptick in late payments came a rise in chargeoffs and an increase in personal bankruptcy filings. Such filings for the 12 months through September exceeded one million for the first time.

"We're still concerned about card delinquencies," said James Ahearn, who runs Boatmen's Bancshares' credit card operation in St. Louis. "We think there's still the potential for increased delinquencies and chargeoffs."

Mr. Ahearn said what is particularly troublesome in Boatmen's portfolio of $625 million loans on 800,000 card accounts is that bankruptcies represent a greater portion of total losses than before.

Before the middle of this year, bankruptcies represented less than 40% of chargeoffs, he said. They're now close to 50%. "We don't see that trend reversing itself right at the moment."

Total consumer credit and card loans extended by banks rose 2% from January through Oct. 31, he said. This compares to 5.5% growth in overall bank credit and 3% in card loans for the same period in 1995.

As a consequence, banks' market share in consumer lending has dropped 2 percentage points since yearend 1995, to 47%, Mr. Chessen said.

The ABA said its figures for delinquent card loans differ from those the Federal Deposit Insurance Corp. reported last week because they are seasonally adjusted. Also, the ABA looks at the number of delinquent accounts, while the FDIC reports the dollars that are delinquent.

The percentage of delinquent credit card loans jumped to 4.5% of the total in the third quarter, from 4.1% in the second quarter, the FDIC said.

Two indexes that rate the quality of securitized card loans suggest the industry is not out of the woods yet.

Moody's Investors Service reported that the delinquency rate in securitized pools of credit card loans rose to 5.22% in October, from 4.23% a year earlier. The 23.29% increase was the steepest year-over-year increase since March 1991.

Edward Bankole, who oversees Moody's index, said the pace of delinquency growth seems to be slowing.

"There may be some signs of improvement because of slowing growth in the level of revolving credit and ongoing improvement in real wages," he said. Wages have had a 3% annualized growth.

Moody's said the average chargeoff rate in securitized credit card pools was 5.59% in October, unchanged from September.

Fitch Investors Service reported that card chargeoffs were $658.8 million in November, up $27.6 million from the previous month, equal to a chargeoff rate of 5.49%.

In its most recent report, Fitch said it expects consumer loan quality to deteriorate through the first quarter.

A separate telephone survey of 1,000 consumers conducted by the ABA found 16% of respondents who said they had paid their credit card bills late in the past year. Of those, 29% were 35 to 44 years old, and 40% earned $50,000 or more.

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