Late Card Payments Increase

The percentage of consumers falling behind on credit card payments rose in the second quarter to the highest level in nearly three decades, according to a report released Friday.

Analysts said the report was particularly worrisome because it shows significant financial stress on households even before the Sept. 11 terrorist attacks, which many economists believe will push the nation into a recession.

In the second quarter, credit card payments past due 30 or more days jumped by almost a full percentage point to a seasonally adjusted 3.93% from 2.99% in the first quarter, according to the American Bankers Assn. In the second quarter of last year, the rate also was 2.99%.

The increase is a result of “a stagnant economy and the cumulative effect of layoffs,” said James Chessen, the association’s chief economist. “When you have a slower economy and people losing their jobs, it’s inevitable that the stress of their financial obligations will catch up to a small percentage of individuals.”

The latest credit card delinquency rate is the highest since 1972. The report also shows that the delinquency rate on a composite of other kinds of loans--including auto, personal and fixed-term home equity loans--rose to 2.51%, the highest rate since 1997. It was 2.4% in the first quarter.

“We’re looking at a very serious downturn,” said Dean Baker, an economist who co-directs the Center for Economic and Policy Research, a liberal think tank.

Some economists have long expressed concerns about the risks of mounting consumer debt loads, saying that would deepen both a recession and the stress on families during a downturn.

Chessen said the higher delinquency rates also show that tax rebates, lower interest rates and home refinances can go only so far in providing financial relief.