BACK

Research and Statistics

Rise in delinquencies signals prolonged credit card woes

Summary

Though charge-offs decreased during September, the credit card industry braces for an eventual increase in noncollectable debt as delinquencies rise.

The content on this page is accurate as of the posting date; however, some of our partner offers may have expired. Please review our list of best credit cards, or use our CardMatch™ tool to find cards matched to your needs.

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

Editorial Disclaimer

The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

What’s up next?

In Research and Statistics

Credit card interest rates push higher again

APRs on new credit card offers inched up to 12.64 percent this week, says the CreditCards.com Weekly Credit Card Rate Report. This continues recent trends of rising interest rates this year, as banks continue to make moves ahead of a new card law.

See more stories
Credit Card Rate Report Updated: July 2nd, 2020
Business
13.91%
Airline
15.48%
Cash Back
16.09%
Reward
15.82%
Student
16.12%

Questions or comments?

Contact us

Editorial corrections policies

Learn more

Join the Discussion

We encourage an active and insightful conversation among our users. Please help us keep our community civil and respectful. For your safety, do not disclose confidential or personal information such as bank account numbers or social security numbers. Anything you post may be disclosed, published, transmitted or reused.

The editorial content on CreditCards.com is not sponsored by any bank or credit card issuer. The journalists in the editorial department are separate from the company’s business operations. The comments posted below are not provided, reviewed or approved by any company mentioned in our editorial content. Additionally, any companies mentioned in the content do not assume responsibility to ensure that all posts and/or questions are answered.