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Credit-card bills: Past due
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September 17, 1996: 6:52 p.m. ET
U.S. credit-card delinquencies hit record in 2Q. Will retailers suffer?
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NEW YORK (CNNfn) - U.S. credit-card delinquencies -- accounts 30 days or more overdue -- hit a record 3.66 percent of all accounts during the second quarter, the American Bankers Association reported Tuesday.
The ABA said delinquencies, reported on a seasonally adjusted basis, rose from 3.53 percent in the first quarter.
Commenting on the report, Britt Beemer, chairman of America's Research Group, told CNN's Business Day said two factors have helped lead to more credit-card delinquencies:
- banks are giving out an increasing number of cards, so people with handfuls of plastic tend to panic and charge even more when they get in trouble;
- a growing number of lawyers advertise personal bankruptcy as a solution.
Beemer said consumers see these commercials and think of bankruptcy as a safety net that no longer carries much stigma.
"One in five people are being impacted by all these advertising lawyers on television, telling Americans it's not a problem," Beemer said.
He added that research is showing that for the first time in 17 years, Americans are making the moral decision that debt is not an individual's responsibility.
For U.S. retailers, the high credit-card debts could hurt sales, which Beemer said have been lagging recently.
He said U.S. back-to-school shopping rose just 0.2 percent this year from 1995 levels -- far less than the 0.8 percent gain expected.
Beemer also expects a disappointing Christmas season this year for U.S. retailers.
"Christmas is going to be very, very weak," he predicted, saying sales will rise "at best" no more than 1 to 1.5 percent from 1995 levels -- and perhaps "just be flat compared to last year."
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