Rise in Credit Card Late Payments
December 7, 2007
When compared to the delinquencies and write offs associated with the current home loan mess, consumer credit card delinquencies have been down, or at least not as prevalent as home loan late payments. That, however, may be changing.
According to information released from the Federal Reserve and the FDIC, write offs for credit card loans as well as other types of consumer loans were relatively stable during the first half of 2007. During the third quarter, however, write offs started to increase.
The FDIC reported that net credit card write off rates hit 4.29 percent in the third quarter. This is compared with a rate of 4.03 percent in the second quarter. Even though this represented an increase, it was far less than the 7.69 percent seen in the first quarter of 2002 which is considered the last period of severe economic weakness.
During the third quarter it was also reported that growth in consumer finance was starting to decrease. In the third quarter of this year, consumer credit rose at a 5.25 percent annual rate. This is according to information from the Federal Reserve. The rate was a little slower than the 5.4 percent annual rate that had been posted in the third quarter of 2006.
Financial experts agree that as sub-prime mortgage homeowners become more embroiled in their mortgage problems, late credit card payments may begin to follow