Spiraling U.S. Credit Card Delinquencies Continue
In a press release, Fitch Ratings says that "U.S. consumers are falling further behind on their credit card bills as the economy continues to unravel, setting the stage for record default rates going forward. For the second consecutive month, credit card delinquencies breached all-time highs according to the latest Fitch Credit Card Index results. At January month end, the 60 plus day delinquency rate was 4.04%. The results come amid an unending parade of troubling economic data from surging unemployment to steeper declines home and equity market values."
"Record credit card delinquencies are just the latest sign that U.S. consumers are under considerable levels of stress," said Managing Director and U.S. Consumer ABS head Michael Dean. "The latest numbers point to even higher default rates and worsening consumer credit quality measures in the coming months."
Credit card issuers typically charge off receivables after 180 days of delinquency or within 60 days of a bankruptcy filing. This month's rise in delinquencies indicates that gross chargeoffs, at 7.40% as of January month end, are likely to rise significantly in the near term.
"As the unemployment rate accelerates and consumers' ability to service their debt weakens, Fitch anticipates that gross chargeoffs will surpass 8.5% by mid-year and approach 9% by year end," said U.S. Consumer ABS Senior Director Cynthia Ullrich.
Despite the trends, Fitch anticipates downgrades will be limited in credit card ABS, particularly at the 'AAA' level given available credit enhancement levels and proactive efforts by issuers to stem the deterioration and preserve existing ratings.
I'm sure that as the delinquencies keep rising the
CC companies will send out more junk mail looking for new sign ups. I trashed 9 envelopes addressed to my son and myself for new CCards yesterday.
Keep up the good work
Posted by: Al | March 11, 2009 at 05:50 AM