Credit Card Delinquencies Increase 30% : Debt: Analysts say many cases stem from unemployed consumers using credit to cover their living expenses.

Credit card delinquencies have jumped 30% in the past year, in many cases because unemployed consumers have tapped credit lines to the limit to pay for food, rent and utilities, credit trackers said Wednesday.

Moody’s Investors Service in New York reported that 6.13% of all credit card users were at least 30 days behind on their payments in March, compared to 4.71% in March of 1990. Moody’s analyst Andrew Silver blamed the jump on the recession.

The surge in delinquencies has precipitated a 42% increase in the amount of card debt that banks have charged off as uncollectible, Moody’s added.

Because of that, “I think you’re going to see an absolute dollar decline (in revenue) in a lot of these credit card operations this year,” said Charles W. Peabody, a bank analyst for Kidder, Peabody & Co. in New York.

One of the reasons for the jump in delinquencies is that many of the recently unemployed “are using credit to get through until they get their next job,” said Gary Stroth, executive director of Consumer Credit Counselors of Los Angeles. The nonprofit organization has 180 offices in the United States and Canada to help consumers with debt problems.

Stroth estimated that his office has seen a 20% to 25% increase in the number of people seeking credit counseling who say they have reached their credit card limits to pay for living expenses.

Although typical credit card customers can obtain only $100 to $300 in cash advances at a time, “you can go back every other day until you reach your credit limit,” Stroth said. In some cases that can be as short as a week or two, he said.

The increase in credit card delinquencies that his counselors are seeing is a reflection of increased unemployment in the Southland, especially in the aerospace industry, which has been hit hard by defense cutbacks the past year, Stroth said.

Some credit card users who are still employed are seeking credit counseling, he said, because their companies have eliminated overtime--a luxury that too many workers had come to depend on.

Stroth added that moonlighting income also has dried up. In these hard times, second jobs are much harder to find, he said.

In addition, the jump in delinquencies has led to “a lot more people” applying for personal bankruptcy, Stroth said. He said personal bankruptcy filings in California surged 7.44% to 101,000 between 1989 and 1990.

Peabody said credit card delinquencies could accelerate in the wake of a recent Supreme Court decision that allows individuals--as well as businesses--to file for protection from creditors under Chapter 11 of the U.S. Bankruptcy Code. Such a filing allows individuals to retain their assets while they reorganize their financial affairs.

Banks have enjoyed increased revenues from credit cards in recent months, as their cost of funds has dropped while the cards’ interest rates remain high. But rising credit card delinquencies have cut into banking revenues, though not as severely as losses from commercial real estate and Third World portfolios, analysts said.

And “with the use of personal bankruptcies escalating, banks are increasingly at risk of loss,” Peabody said.

Past-Due Credit Percentage of outstanding credit card loans that are at least 30 days past due: March, 91: 6.13% June, ‘89: 4.15% Source: Moody’s Investors Service