U.S. card losses could hit new highs in 2009: Fitch

NEW YORK (Reuters) - U.S. credit card losses could set new highs in 2009, due to higher unemployment, volatile energy prices and fewer refinancing options, Fitch Ratings said in a report on Tuesday.

Credit card losses have increased this year to around 5 percent to 7 percent of the loans portfolio as the economy deteriorated, but the worst is yet to come.

With unemployment at its highest level in 14 years and home foreclosures at record highs, card issuers -- such as Citigroup Inc (C.N), JPMorgan Chase & Co (JPM.N), American Express Co (AXP.N) and Discover Financial Services (DFS.N) -- anticipate further credit losses next year.

"Fitch expects credit metrics will continue to deteriorate in fourth quarter-2008 and into 2009, with some issuers surpassing historical loss peaks before 2009 is over," the rating agency said in a statement.

"A turn in the cycle will be heavily dependent upon the duration of an economic downturn and the severity of the increase in the unemployment rate," Fitch added.

Credit card companies have been setting aside money to cover credit losses, but analysts estimated the lenders would still need higher provisions.

This week, American Express, the fourth-largest U.S. credit card issuer, won approval to become a bank holding company, a step that could cut its borrowing costs by gaining access to deposits and give it more access to government money.

Fitch believes rating pressure will mount as economic headwinds hit consumer credit.

"Declines in profitability which are not offset by enhanced liquidity and capitalization could prompt negative rating actions," the rating agency said.

(Reporting by Juan Lagorio; Editing by Andre Grenon)