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According to a quarterly survey by the American Bankers Association, late payments on credit card bills increased in the first quarter of 2006. Between January and March 2006, 4.4 percent of credit card payments were made 30 or more days late. That’s up from 4.27 percent in the fourth quarter of 2005.

The official line from the ABA is that higher gas prices are pushing people to make their payments late. Here’s a quote from an Associated Press story on the MSNBC Web site:

James Chessen, the association’s chief economist, explained:

Credit card loan payments are sensitive to financial pressures. As gas prices eased at the end of 2005, so did credit card late payments. But the favorable gas-price effect evaporated during the first quarter of 2006, and it’s no wonder why. The Federal Reserve continues to raise interest rates and high energy prices are taking a bite out of disposable income.

But my money’s on the fact that the vast number of interest-only and negative amortization mortgages in the United Stares is also having an effect on whether people can pay their credit card bills on time.

An estimated five percent of all the mortgage debt in the United States is due to be subject to monthly payment resets this year. That’s when the introductory rate on all those mortgages runs out and borrowers have to pay much higher payments.

I’m going to keep touting those mortgages as a vital economic sign to keep watching for the next few years. If it becomes a huge problem, at least we can say we covered it all along. If it fades into nothing, hopefully everyone will forget how wrong I was.

WILL CARLESS

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