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Credit card delinquencies fall in final three months of 2005

WASHINGTON (AP) - The number of consumers behind on their credit card bills, after hitting an all-time high a year ago, declined in the final three months of 2005.

The American Bankers Association reported Tuesday that the percentage of credit card accounts 30 or more days past due slipped to 4.27% in the October-December quarter.

That was down from 4.74% in the July-September quarter. That level had in turn been an improvement from a record high of 4.81% set in the April-June quarter of 2005.

``With job growth strong over the last year and gas prices easing by year-end, the delinquency picture has brightened considerably,'' said James Chessen, chief economist for the ABA.

But he cautioned that the improvement could be derailed by the devastation from last year's Gulf Coast hurricanes.

``The full financial effect of Katrina is still unknown,'' Chessen said. ``It may be many months before its impact is reflected in the delinquency picture and will depend on the success of reconstruction efforts in those regions.''

He said 1.4 million households in Louisiana, Mississippi and Alabama - 1.4% of total U.S. households - had been affected by Katrina.

Chessen said another factor in the drop in credit card delinquencies in the final three months of last year was the change in the bankruptcy law.

There was an October 12 deadline for filing for bankruptcy under the old system, which prompted a filing rush by debtors seeking to beat the deadline. This had the effect of wiping clean credit card debt that normally would have been reported as delinquent in the fourth quarter of last year.
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