US credit card delinquencies increase

Agence France-Presse

Fitch Ratings said in a report Tuesday that credit card delinquencies hit a new record for the second straight month in January, with 4.04 percent of consumers at least 60 days late. "Record credit card delinquencies are just the latest sign that consumers are under considerable stress," said Fitch's Michael Dean. "The latest numbers point to even higher default rates and worsening consumer credit quality measures in the coming months."

Credit card issuers typically charge off bad debt after 180 days of delinquency or within 60 days of a bankruptcy filing. The rise in delinquencies indicates that chargeoffs, at 7.40 percent as of January month end, are likely to rise significantly in the near term, according to Fitch.

"As unemployment accelerates and consumers' ability to service their debt weakens, Fitch anticipates that gross chargeoffs will surpass 8.5 percent by mid-year and approach 9.0 percent by year end," said Fitch consumer analyst Cynthia Ullrich. Some analysts say the problems in credit cards could deal another blow to a banking industry already reeling from the meltdown in real estate, and that the industry issued too many cards and too much credit to consumers unable to afford them.