NEW YORK Feb 4 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)