February 4, 2009 / 6:04 PM / 8 years ago

US credit card delinquencies at record highs -Fitch

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NEW YORK, Feb 4 (Reuters) - Delinquencies on U.S. credit cards rose to record highs in January as the economic recession weakened consumers' finances, Fitch Ratings said on Wednesday.

Payments at least 60 days late measured by a Fitch index rose 0.47 percentage point to 3.75 percent last month, after accelerating in the fourth quarter, Fitch said in a statement. The previous record was 3.73 percent in February 1997.

"U.S. consumers continue to struggle in the face of mounting pressures on multiple fronts, from employment to housing to net worth," Michael Dean, a managing director at Fitch, said in the statement.

Concerns that the U.S. recession will deepen as foreclosures rise and businesses lay off thousands have sparked a flurry of unconventional moves to spur growth, including credit-easing measures that have already doubled the size of the Federal Reserve balance sheet to more than $2 trillion.

A Fed program to lend up to $200 billion to holders of ABS backed by new or recently issued consumer loans is expected by analysts to boost availability of loans for autos, education and credit card balances.

But rising delinquencies and charge-offs by credit card companies will hurt performance of asset-backed securities (ABS) supported by credit card receivables, Fitch said. But downgrades are seen limited in the near-term, it added.

Total charge-offs on prime, general purpose credit cards from the December collection period rose 0.66 percentage point to 7.5 percent, up 40 percent from a year earlier and the highest since bankruptcy reforms caused a spike in 2005, according to another Fitch index.

Fitch estimates charge-offs will near 9 percent by the second half of this year.

Retail store credit card delinquencies rose 0.12 percentage point to 5.2 percent, though the rate of increase has slowed for the second month. Charge-offs on retail cards were flat at 10.51 percent, 44 percent higher than a year earlier.

Reporting by Al Yoon, Editing by Chizu Nomiyama

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