It's hardly a surprise that consumer loan delinquencies are on the rise. What do banks and credit card companies expect consumers to pay with when job losses are at an all time high?
Still, today's numbers are striking: During the first quarter, the delinquency rate among eight types of closed-end installment loans rose to 3.23%, according to the American Bankers Association. This is the highest recorded increase since ABA started tracking the rate in the mid-1970s. In the fourth quarter of 2008 the rate was 3.22%.
And credit card delinquencies also moved higher, growing 4.75% in the first quarter from 4.52% in the fourth quarter last year. The percentage of all outstanding debt on credit cards hit a record high of 6.6%.
ABA defines delinquent payment as one that is more than 30 days past due.
This ultimately can only mean more losses for already troubled companies like
Bank of America
Capital One Financial
Discover Financial Services
JP Morgan Chase
Shares of Citigroup fell 4% to $2.68 in afternoon trading, American Express was down 2% to $23, Capital One dropped 2% to $20.54 and Discover Financial plunged 11% to $9.36.
The main culprit: a growing loss of jobs. The unemployment rate
, with 467,000 jobs cut during the month.
"When people lose their jobs, they can't pay their bills," James Chessen, ABA's chief economist said in a statement. "Delinquencies won't improve until companies start hiring again and we see a significant economic turnaround."
Delinquencies for home-equity loans also touched record highs, rising to 3.52% in the first quarter.
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