August 6, 2009
-
News: UK Credit Card Defaults Rising
A recent Fitch Ratings report that the UK is not far behind the U.S. painful economy as their unemployment rate in June rises to 7.6% and believes it will continue to rise over the next year to over 9%. Britain's credit card debt hit over $92 billion. Credit card defaults are rose by 46.5% from a year ago to record breaking highs of over 10% for the month of June. Egg Banking's Pillar Funding had the fewest credit card write-off's of 6.5% while NBNA Europe Bank's Chester Asset Receivables Dealings II stands at 12%. Fitch expects that bankruptcy filings will continue to grow as card defaults continue to rise.
One of the UK's largest financial institution, Barclays, a global retail and commercial banking and investment firm reported credit card defaults nearly doubled during the first two quarters of 2009 to over $1.5 billion. Barclays is a premier and innovative financial institution and the first to issue a rewards card for environmentally friendly products. The company's retail division's pretax profits dropped by 61%. Two other large UK banks, Royal Bank of Scotland and Lloyds Banking Group are also reporting high credit card defaults rates with little relief in sight. Lloyds reported higher than expected card defaults which drove first and second quarter profits down.
On Thursday, the Bank of England is expected to drop an additional $84 billion into the UK system in hopes of stimulating the economy. The UK's unemployment rate is the highest in 14 years while credit card defaults are the highest since Fitch began tracking it in 2001. It is expected that defaults could continue to rise to a record breaking 15%. The numbers are a clear indication that UK citizens are feeling the same crunch of a rising cost of living and unemployment issues as with other countries like the U.S. and Canada.