Credit card debt defaults decrease, delinquencies see a rise
Wednesday, Dec 2, 2009
By Jennifer Hewitt – Bills.com
Fitch Ratings reports that though credit card defaults dropped for the month, the number of accounts that were 60 or more days delinquent saw an increase of 19 basis points and came in at 4.41 percent. On the other hand, defaults dropped 66 basis points for the monthto rest at 10.09 percent.
Both delinquencies and defaults are still much higher than levels seen in 2008. Late-stage delinquencies are 31 percent higher than at the same time last year, while defaults are 55 percent above 2008’s levels.
An increase in delinquencies may be an indication that defaults are going to climb in the coming months.
“Credit card delinquencies are on the rise again and cardholder defaults will re-test recent highs as we head into the new year,” Michael Dean, managing director with Fitch Ratings, said.
One of the major factors that may play into an increase in loan defaults is the fact that people are having a hard time finding a job. Recently, the unemployment rate climbed from 9.8 to 10.2 percent from September to December. Many analysts expect that it will remain above 10 percent for much of next year.
