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Published: 9/29/2005

Delinquent credit card accounts hit record

BY JULIE M. McKINNON
BLADE BUSINESS WRITER

High gasoline prices helped push credit card payment delinquencies to a record in the second quarter, and with pump prices continuing to rise, the rate is unlikely to improve, according to a report released yesterday.

In the second quarter, payments were overdue at least 30 days on 4.81 percent of accounts, compared with 4.76 percent in the first quarter, the American Bankers Association said.

"Gas prices are taking huge chunks out of wallets, leaving some individuals with little left to meet their financial obligations," James Chessen, the group's chief economist, said in a statement.

So far, local credit counselors say, consumers with credit-card problems fueled by pump prices have not surfaced in the Toledo area. Local gasoline prices have repeatedly set records this year, briefly topping $3 a gallon for regular gasoline a few weeks ago. "It may come to pass a few months from now," said John Walters, director of Toledo's Community Credit Counseling Specialists Inc. "I do anticipate it."

Meanwhile, consumers are listing prices for gasoline and other fuel as contributing to their budgeting problems, said Jim Welch, financial counselor supervisor for the Consumer Credit Counseling Service of Northwestern Ohio in Toledo.

Hardest hit are people who commute long distances to work, especially if two adults in a household do, Mr. Welch said. In that scenario, an additional $25 a week in gas for each vehicle mushrooms into $200 from a household's monthly budget, he said. "You have quite a few people who that's really taking a toll on."

Employees at some local gasoline stations said they haven't noticed an uptick in the number of people using credit cards as prices rise. About 70 percent of customers at one Marathon station in Toledo use credit or debit cards, a manager said.

For consumers who like the convenience of paying for gas at the pump, a debit card is a better idea than a credit card, said Mr. Walters of Community Credit.

Then the payment, he added, comes directly from a checking account - and is part of monthly expenses - instead of becoming a debt that may not get immediately paid. "You don't get in trouble with a debit card," he said.

The collective delinquency rate on installment loans tracked by the bankers' group increased to 2.22 percent in the second quarter from 2.03 percent in the first.

Contact Julie M. McKinnon at:

jmckinnon@theblade.com

or 419-724-6087.



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