U.S. credit card defaults rise to record: Moody's
NEW YORK (Reuters) - The U.S. credit card charge-off rate rose to a record high in August, as more Americans lost their jobs, Moody's Investors Service said on Wednesday, in another sign consumers remain under stress.
The Moody's credit card charge-off index -- which measures credit card loans that banks do not expect to be repaid -- rose to 11.49 percent in August from 10.52 percent in July.
The index resumed an upward trend after declining in July for the first time in almost a year, vanishing hopes of stabilization in the industry after record high credit losses.
"We continue to call for a recovery of the credit card sector to begin once industry average charge-offs peak in mid-2010 between 12 percent and 13 percent," Moody's said in a report.
Credit card losses usually follow the trend of unemployment, which rose in August to 9.7 percent, the highest level in 26 years. Moody's estimated unemployment will peak next year at 10 percent to 10.5 percent.
The Moody's index showed credit card delinquencies -- payments more than 30 days late -- rose to 5.80 percent in August from 5.73 percent in July.
"Even early-stage delinquencies rose, ending a trend of four consecutive months of improvement," Moody's said in a report.
Data released by companies earlier this month based on the performance of credit card loans that were securitized showed defaults rose to record highs at Bank of America Corp and Citigroup Inc, among some of the biggest card issuers.
Both Citigroup and Bank of America hold the highest exposure to riskier credit card borrowers.
However, American Express Co and Capital One Financial Corp posted monthly declines in chargeoffs.
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