June 03, 2010
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News: Fitch On CC Delinquencies For May
The U.S. began seeing credit card delinquencies trend down during the spring offering signs of a recovering economy. For the fourth consecutive month, the trend continued during the month of May according to the latest report by Fitch Ratings. According to the report that was released today, U.S. credit cardholders that were late 60 days or more during the month of May fell to 4.18 percent from the 4.27 percent in April. Earlier stage credit card delinquencies of 30 days delinquent also fell during May to 5.53 percent down from 5.75 percent in April and 6.14 percent same time last year. Delinquencies that continue past the 180 day mark will be written-off by the banks.
While credit card delinquencies continued to trend downward, defaults remained high as the U.S. overall defaults increased to 11.1 percent in May up from 10.93 percent from the previous month of April. The increase in defaults was not a surprise as credit card delinquencies are a predictor of defaults. However, with the decrease in delinquencies over the past four months, banks are expected to begin experiencing a decrease in card loan defaults. Of course, the unemployment situation will be the determining factor as unemployment remains high. If anything is to change, the country needs to realize an increase in growth which is dependent on consumer spending; something that many consumers are not willing to risk as they continue to recover from the stinging effects of the credit industry.
Fitch Ratings is an international credit rating agency and is a subsidiary of the Fitch Group, a financial corporation whose divisions include Fitch Solutions, an advisory firm offering products and services to the financial industry. The company was formed in part as a result of mass criticism on rating agencies. Fitch utilizes its risk management software and research to develop its credit card Index which includes general purpose portfolios from the top lenders including Bank of America, Chase, Citibank, American Express, Capital One and Discover.