Originally created 06/18/97

Consumer delinquencies decline slightly



WASHINGTON (AP) - The number of Americans falling behind on their credit card bills dropped during the first three months of the year from a record high at then end of 1996.

The delinquency rate - the percentage of accounts 30 or more days overdue - declined to a seasonally adjusted 3.51 percent in the first quarter, compared with 3.72 percent in the fourth quarter, the American Bankers Association said today.

That's an improvement, but still far above three and four years ago, when delinquency rates fluctuated between 2.5 percent and 3 percent.

"It may have stopped raining, but there are still clouds in the sky," said James Chessen, the association's chief economist.

Increased delinquencies have coincided with an explosion in personal bankruptcies, which reached a record 1.19 million during the 12 months ended March 31, despite robust economic growth and a low unemployment rate.

Consumer groups blame banks for signing up poor credit risks, but bankers note they've been tightening credit standards and lowering credit limits.

"More tightening may be needed," Chessen said.

While the delinquency rate improved for credit cards, it hit a new high for home equity lines of credit, rising to 1.20 percent from 1.04 percent in the fourth quarter and 0.82 percent a year ago. Chessen called the rapid rise troubling.

"Typically, this is the last place that consumers will let themselves be delinquent," he said. "The rising ratios suggest that a small portion of consumers continue having severe debt problems."

The bankers association said a composite delinquency rate for a variety of closed-end consumer loans - as opposed to open-ended credit such as credit cards and home equity lines - rose from 2.34 percent in the fourth quarter to 2.47 percent in the first, the highest level in five years.