Rise in delinquencies signals prolonged credit card woes
By Cara Henis
Despite a decrease in the number of credit card charge-offs, experts predict more credit card woes ahead as the credit card delinquency and unemployment rates continue to rise, according to Fitch Ratings, a credit rating agency.
Last month, charge-offs -- the amount of credit card debt deemed uncollectable by banks -- dropped to 10.75 percent, down by about half a percentage point from last month's record high. Yet the number of delinquent accounts on which a minimum payment was more than 60 days late rose to 4.22 percent. The delinquency rate is 33 percent higher this year compared to the same time last year. Early stage delinquencies, where payment is at least 30 days overdue, also increased.
These rises in delinquencies are a sign that more consumers may not have the means to pay off their debts, which could trigger another rise in charge-offs.
"While somewhat seasonal, the rise in delinquencies provides further evidence that charge-offs will remain elevated in the coming months," said Cynthia Ullrich, Fitch senior director, in a press release.
In September, unemployment reached a seasonally adjusted 9.8 percent, according to the U.S. Bureau of Labor Statistics. These rates are expected to climb throughout the year before peaking at about 10.3 percent in mid-2010.
"U.S. consumer credit quality measures remain pressured and charge-offs will stay high until we see some improvement in employment conditions and in delinquency trends," said Michael Dean, Fitch managing director, in a press release.See related: APRs rise, even after Fed leaves rates unchanged, Bankruptcy filings on track to hit 1.4 million in 2009, Credit card balances fall by nearly $10 billion in August
Published: November 4, 2009
- Poll: You can get better credit card terms just by asking – If you want better credit card terms, the best thing to do is call your card company and ask, a new CreditCards.com survey shows ...
- Applications dip, credit market shows signs of cooling off – The market for consumer loans, including credit cards, pulled back in a February survey of consumers ...
- Online and mobile banking statistics – Bank branches aren't a thing of the past yet, but that could be the way they're headed now that consumers can deposit checks, check balances and even open accounts via computer or smartphone ...