Fitch: U.S. Credit Card Late Payments Hit Record Highs, Chargeoffs Spike

NEW YORK--(Business Wire)--
Late payments on U.S. credit cards topped record levels and defaults rose
sharply to just below all time highs last month as consumers struggled further
amid the deteriorating economic environment, according to the latest Credit Card
Index results from Fitch Ratings.

As anticipated, the negative chargeoff results were offset by lower funding
costs helping to maintain excess spread cushions for credit card ABS. In
addition, monthly payment rates snapped back from the prior month's four-year
lows although they continue to exhibit slowing trends on year-earlier
comparisons.

Consistent with previous indications, Fitch expects credit card ABS performance
to worsen further given recent delinquency and bankruptcy trends and the rise in
unemployment levels. Nevertheless, negative rating actions are expected to be
limited in the near term.

'U.S. consumers continue to struggle in the face of mounting pressures on
multiple fronts from employment to housing to net worth,' said Managing Director
Michael Dean. 'While we expect these issues to further impact credit card ABS
performance going forward, available credit enhancement and structural features
help reduce the risk of widespread downgrades.'

Fitch anticipates chargeoffs will breach 8% in the coming months and approach 9%
during second half-2009. Deterministic stress testing on Fitch rated trusts
indicate existing ratings can withstand such scenarios with potential negative
rating actions limited to subordinate classes. Additional information is
available in Fitch's Dec. 15, 2008 report 'U.S. Credit Card 'What If?' Stress
Scenario', available at www.fitchratings.com.

Prime general purpose card results for the December collection period show
Fitch's Chargeoff Index rising 66 basis points (bps) to 7.50%, the highest level
since the bankruptcy reform spike in late 2005 when chargeoff rates reached
7.53%. Current levels are now 40% higher than year earlier results.

Late stage delinquencies continued to rise as well with the Fitch's 60+ day
Index rising 47 bps to a record 3.75%. The previous high was 3.73% in February
1997. Although late stage delinquencies were elevated throughout 2008, they
escalated rapidly in fourth quarter-2008 by 18% to current levels.

In other prime card performance measures, monthly payment rates partially
rebounded from a substantial drop in November, rising 131 bps to 17.27%. This is
indicative of some seasonal correction, as the index typically exhibits a slow
payment rate in November. However, MPRs are still 174 basis points lower than
one year ago. Excess spread levels increased by 12bps as they continue to
benefit from falling LIBOR rates; the base rate, a measure of trust expenses
including debt servicing costs fell 36 bps month over month and 311 bps lower
than last year. Meanwhile, portfolio yields normalized to 17.21% after last
month's drop caused by day count issues in November. Although yield is 245bps
lower than last year, this is attributable to the drop in prime rate, which is
down by over 300bps year over year.

Retail Card chargeoffs were flat to month earlier and retail card delinquencies
rose further. At 10.51%, Fitch's Retail Card Chargeoff Index remains 44% above
year earlier levels. Despite climbing 12 bps to 5.20%, the rate of increase in
Fitch's Retail Card Delinquency Index slowed for the second straight month.
Retail card excess spread (three-month average) dropped to 8.49% from 9.34%
largely due to a decline in portfolio yields. MPRs remain low but seasonal
trends show an average increase in the January collection period of 80-120 bps
in prior years.

Fitch's rating definitions and the terms of use of such ratings are available on
the agency's public site, www.fitchratings.com. Published ratings, criteria and
methodologies are available from this site, at all times. Fitch's code of
conduct, confidentiality, conflicts of interest, affiliate firewall, compliance
and other relevant policies and procedures are also available from the 'Code of
Conduct' section of this site.

Fitch Ratings
Michael Dean, +1-212-908-0556
Cynthia Ullrich, +1-212-908-0609 (New York)
Media Relations:
Sandro Scenga, +1-212-908-0278 (New York)
sandro.scenga@fitchratings.com

Copyright Business Wire 2009