Jump To Navigation
Click Here for a Free Evaluation

Blog Topic

Credit Card Defaults Hit Historic Highs

NEW YORK (Reuters) - Rising job losses, volatile energy prices and fewer refinancing options will lead to higher delinquencies that are likely to push U.S. credit card portfolio losses past historical peaks in 2009, Fitch Ratings said in a report on Monday.

While it expects ongoing deterioration in the fourth quarter and into the coming year, Fitch said a turn in the cycle will be heavily dependent upon the duration of the economic downturn and the severity of any increase in the unemployment rate, now at 6.1 percent.

"Recently announced government-led intervention programs are expected to ease the funding strain for some large card issuers, but lenders are expected to remain cautious on portfolio growth in 2008 and 2009," said Meghan Crowe, a director at Fitch.

"Many issuers have ramped-up deposit growth and retail funding efforts in recent months in order to reduce reliance on the ABS markets," Crowe said.

Fitch expects a greater proportion of maturing asset-backed debt may be refinanced on balance sheets in 2009. Competition for deposits is expected to intensify as many financial institutions attempt to shore-up cheaper sources of liquidity.

Increased demand for deposit funding will likely result in pricing pressure over time. Issuers are expected to remain flexible by closely monitoring pricing rationalization in the ABS markets.

While asset quality metrics have deteriorated and funding costs have increased, large credit card issuers have generally maintained stable rating outlooks, as portfolio risks have been offset with greater contingent liquidity and higher capital levels, Fitch said.

The firm anticipates rating pressure will mount over the remainder of the year and into 2009 as economic headwinds negatively impact consumer credit. Declines in profitability that are not offset by enhanced liquidity and capitalization could prompt negative rating actions, it said.

If you are experiencing difficulty making your monthly credit card payments, or are consistently only able to pay the minimum payments on your credit cards, please give me a call at 407-898-8225 to find out how I may be able to help you.

Hunter

hunter@khuntergoffpa.com 

 


Subscribe

  • RSS 2.0 Feed
  • My Yahoo!
  • Sub Bloglines
  • MyFeedster
  • newsgator
  • My MSN

What is RSS?

1215 E. Livingston Street
Orlando, FL 32803
407-982-3837

3111 West Dr. MLK, Jr. Blvd.
Suite 100
Tampa, FL 33607
1-866-526-9282