Amid Job Market Growth, Consumer Delinquencies Wane

Economic tailwinds are helping consumers make timely loan payments.

As American Banker reported Wednesday (April 4), delinquent payment rates waned a bit in the fourth quarter of last year, with late payments to banks slipping.

The financial publication noted that those late payments were lower for nine of the 11 categories tracked by the American Bankers Association (ABA), as measured sequentially from the third quarter of 2017. Payments ran the gamut of auto and personal loans and credit cards, among other borrowing activity.

The percentage of credit card borrowers more than 30 days late on their payments now stands at the lowest level seen in three and a half years, said American Banker. Bank card delinquencies were down 16 basis points to 2.46 percent of all accounts, below the 15-year average of 3.6 percent.

The composite ratio was 1.64 percent in the latest reading, down four basis points and below the 15-year average of 2.14 percent.

The data comes in the wake of a relatively weak third-quarter report, said the American Banker.

In a statement that accompanied the ABA data, Chief Economist James Chessen noted, “It’s rare to see delinquencies fall in nearly every category, and the levels continue to be very low by historical standards. The steady creation of new jobs has been essential to keeping delinquencies low, and we’ve seen more than 10 million jobs filled in the past four years.”

The economist also stated that delinquencies are likely to remain low, as “tax reform has put more money in Americans’ paychecks, which makes it a little easier for them to meet their obligations each month. Consumers have done a remarkable job of managing their finances over the last several years, and we expect that will continue as the growing economy reinforces their financial footing.”



The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.