Consumer credit, auto loans and first mortgage default rates increased in October according to the S&P Experian Consumer Credit Default Indices.
According to the S&P Experian comprehensive measure of changes in consumer credit, defaults were three basis points higher than the September rate, for a composite rate of 0.87 percent in October. The first mortgage default rate also increased three basis points to 0.70 percent and the auto loan default rate rose to 1.08 percent.
The largest increases in the default rate were centered primarily in cities with large populations. Chicago’s default rate rose 10 basis point to 0.97, the rate in New York grew seven basis points to 0.93 percent and the default rate in Los Angeles increased three basis points to 0.62 percent. Dallas experienced an increase of two basis points to 0.76 percent.
What does this mean for accounts receivable management? This is a good example of why it is important to set up as many online automatic debt payment programs with your accounts as possible. Automatic payment plans ensure that default is less likely to happen because there are no checks to write or forget. If an automatic payment plan is out of the question then offering a variety of payment methods as well as automated monthly reminders is the next best thing.
BillingTree provides payment processing software that offers a wide variety of payment methods as well as automatic payment plans. To find out more, contact BillingTree or call us at 877-424-5587.