Job loss hits US card payments
(14 July 2009 – USA) The first quarter of 2009 has seen a significant increase in delinquencies in the US, particularly on credit cards, on the back of growing job losses.
The American Bankers Association (ABA) reported that delinquencies, defined as late payments that are 30 days or more overdue, rose to 3.23 percent across eight major loan categories.
ABA Chief Economist, James Chessen, said the figures are a natural consequence of mounting job losses in a weakening economy and that the number one driver of delinquencies is job loss.
More than two million Americans lost their jobs in the first three months of the year with more than 6 million jobs lost since the recession began, the ABA reported.
The most significant delinquencies, however, can be attributed to bank credit cards, which are increasingly being used to bridge a temporary income gap.
Bank card delinquencies rose 23 basis points to 4.75 percent of all accounts, though just below the record of 4.81 percent in the second quarter of 2005.
The most significant jump, however, is the balances on these delinquent card accounts; these rose dramatically, up 108 basis points to 6.60 percent of the value of all outstanding bank card debt, marking a new record.
Reflecting continued weakness in the housing sector, delinquencies for the home equity category also hit record highs: home equity loan delinquencies rose 49 basis points to 3.52 percent of accounts.
ABA Chief Economist, James Chessen, said the figures are a natural consequence of mounting job losses in a weakening economy and that the number one driver of delinquencies is job loss.
More than two million Americans lost their jobs in the first three months of the year with more than 6 million jobs lost since the recession began, the ABA reported.
The most significant delinquencies, however, can be attributed to bank credit cards, which are increasingly being used to bridge a temporary income gap.
Bank card delinquencies rose 23 basis points to 4.75 percent of all accounts, though just below the record of 4.81 percent in the second quarter of 2005.
The most significant jump, however, is the balances on these delinquent card accounts; these rose dramatically, up 108 basis points to 6.60 percent of the value of all outstanding bank card debt, marking a new record.
Reflecting continued weakness in the housing sector, delinquencies for the home equity category also hit record highs: home equity loan delinquencies rose 49 basis points to 3.52 percent of accounts.
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