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Credit card delinquencies rose to 5.01% of total card loans during the second quarter ended June 30 from 4.75% the previous quarter, according to a report by the American Bankers Association. The credit card delinquency rate was 4.54% for the second quarter of 2008. The association's report defines delinquencies as payments at least 30 days past due. "Six consecutive quarters of job losses have taken their toll. With jobs lost and work hours cut, it doesn't take long for the financial pressure to become overwhelming," James Chessen, the association's chief economist, says of the report's findings. "Falling behind on debt payments is an unfortunate side effect of high unemployment and a frozen job market. The picture won't change until the labor market improves and the economy picks up steam." The composite ratio, which tracks eight closed-end installment-loan categories such as credit card, auto and home-equity loans, increased to 3.35% for the second quarter from 3.23% in the previous quarter, the report states. The ratio was 2.68% for the second quarter of 2008. "The good news is that consumers are clearly being more cautious by saving more, spending less and making great efforts to repair their balance sheets," Chessen says.
