The US credit card sector has posted
charge-offs of 11.15 percent in January but early stage
delinquencies fell to 5.96 percent, according to Moody’s Investors
Service.
The writedown of uncollected credit card debt
by lenders, or charge-offs, rose sharply in January erasing much of
the improvement in the index since its all-time high of 11.5
percent in August.
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Moody’s expects the charge-off rate to peak
close to 12 percent during 2010 if the unemployment rate plateaus
for much of the second half of the year and delinquency rate trends
continue to improve.
“This month marks the first January since 2004
where
early-stage delinquencies declined from the prior December,” said
William Black, senior vice-president at Moody’s.
“This is a welcome improvement that is an
encouraging indication of stability or improvement in charge-off
rates by mid-year.”
But early stage delinquencies, the proportion
of account balances for which a monthly payment is more than 30
days late, declined for a third month in a row.
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By GlobalDataAlso in contrast, excess spread, a proxy for
the profitability of a card programme, fell to 7.62 percent from
8.93 percent in December, a direct result of the higher charge-offs
and lower yields.
