The rising cost of a gallon of gas has overloaded consumers leading them to miss credit card payments. Ilyce talks about the dangers of not paying, or only making the minimum payments, on your credit card.

And the fallout begins.

At the end of September, the American Bankers Association reported the percentage of credit cards that were more than 30-days late rose to an all-time high of 4.81 percent in the second quarter of the year.

Apparently, the rising cost of a gallon of gas has overloaded consumers, according to one economist at the ABA, who also said that the higher cost of borrowing and low personal savings rate also contributed to the problem.

Most gas stations these days are set up to take credit cards at the pump. It’s easier and faster to use a credit card at a gas station pump, instead of going inside to pay for cash with cash. So, more consumers are charging the gas they buy to fill up the tank.

It’s one thing to buy 20 gallons of gas at $1.50 per gallon. That’s a $30 charge. But the cost of gas has nearly doubled in the past year to around $3 per gallon. And instead of charging $30 to fill up the tank, the cost has risen to $60. If you fill up once a week, that’s an extra $120 per month some consumers don’t have.

“Gas prices are taking huge chunks out of wallets, leaving some individuals with little left to meet their financial obligations,” said Jim Chessen, the ABA’s chief economist.

The report monitors credit card payments by quarter. The second quarter ended June 30th, and does not include payment activity during this year’s devastating hurricane season.

But it isn’t that consumers are only late paying their credit card bills. Of the eight different types of consumer credit monitored by the ABA’s Consumer Credit Delinquency Survey, the rate of late payments rose in six of the eight categories, including personal loan delinquencies, direct auto loans, indirect auto loans, recreational vehicle loans, marine loans, and home equity loans.

Property loan and mobile home delinquencies fell during the same period.

With more than a million Gulf Coast residents displaced as a result of Hurricanes Katrina and Rita, it’s likely that these delinquency rates will rise dramatically over the next few quarters. And the rising price of gas isn’t going to help.

Although mortgage companies and some credit card companies have offered a 90-day penalty-free hiatus from making payments, that period will end just as gas and home heating fuel prices rise for the winter.

“With gas prices still rising, the third quarter is not likely to be any better,” Chessen said.

The worst part about being more than 30 days late in paying a credit card bill or your mortgage is that there is an immediate effect on your credit score, the mathematical model lenders use to decide how risky a borrower you’ll be.

According to credit experts, even one late payment can damage your credit score. And, it can take a year or two of on-time payments to help repair your score.

Because credit scores can be damaged so easily, and because everyone from the auto dealer to a prospective mortgage lender to a future employer will probably pull your credit score before doing business with you, it’s important to recognize when your budget is in danger.

For example, it’s a bad sign if you find yourself paying only the minimum payment on your credit card debt month after month, or if you’re always out of cash. Are you late on important payments, such as your rent, mortgage or home equity loan?

According to the ABA, other red flags include taking longer and longer to pay off your loan balances or if you’re borrowing from one lender to pay another.

If this describes how you’re handling your bills, you should talk with your creditors openly about the financial problem you’re having and try to restructure your payments. Consumer Credit Counseling Services (toll free 800-388-2227 or cccsinc.org) offers free budgeting advice. They may be able to find holes in your budget you can plug.

Oct. 6, 2005.