A New Record of Failure

September 29, 2005

The irresponsible use of credit has produced a new record for the American consumer.

The American Bankers Association tells us that the seasonally adjusted percentage of credit cards overdue for 30 days or more increased during the second quarter to 4.81 percent. The amount is just above the 4.76 percent posted during the first quarter. It was also the highest since the organization started collecting the data in 1973.

Some of the reasons for the development: the increased cost of credit; skyrocketing energy prices; and a boost in minimum payments required by credit card companies.

Credit card delinquencies should remain high in future quarters, according to the association's chief economist Jim Chessen.

Making matters worse was that the association also reported that the delinquency rate on a composite of other consumer loan types, including home-equity and car loans, jumped to 2.22 percent during the quarter from 2.03 during the first quarter.

The message to the American consumer: get those payments in on time and, at all costs, avoid those punishing late fees.

By Glenn J. Kalinoski, Executive Editor, Customer Inter@ction Solutions