December 29, 2009
-
News: Moody's; CC Delinquencies Up
It's too early to say how the holiday shopping season affected credit card spending and delinquencies for the month of December, but according to Moody's Investor's Services, the nation's overall delinquencies of 30 to 180 days for November rose slightly from 6.1 percent to 6.2 percent from the previous month. Although credit card delinquencies increased slightly, they continue to remain below the peak of 6.4 percent for the month of March. Delinquencies are an important predictor of credit card defaults. Overall U.S. Credit card defaults also showed a slight increase during November rising to 10.56 percent up from a two month drop of 10.04 percent in October. The nation suffered record breaking defaults during the month of June when they rose to 10.76 percent.
On a positive note, although delinquencies rose, early stage delinquencies of 30 to 60 days fell slightly from 1.66 percent in October to 1.6 percent in November. Furthermore, the actual dollar amount of the total delinquent balances owned by three of the nation's top six credit card companies, decreased from same time last year. According to Moody's, although the numbers are a bit positive, there is no indication that it represents any type of consumer trends. Moody's expects credit card delinquencies to continue to climb into spring and the default rate to peak between 12 percent and 13 percent by mid 2010.
The holiday shopping season may have played a small role in a decrease of credit card payment amount for November which fell by 0.89 percent to 16.42 from the 17.31 percent consumers paid in October. Another contributing factor could be that November was a shorter month than October. Moody's expects this to increase in December. Card earnings fell by 0.15 percent to 21.09 percent in November while the excess spread fell to 7.7 percent for November.