More Americans late on credit card payments

NEW YORK, Dec 3 — US credit card delinquencies rose in October, signalling that defaults may soon test record highs, as debt-burdened consumers keep losing their jobs, Fitch Ratings said yesterday.

The rate of credit card payments more than 60 days overdue — an indicator of future defaults — rose to 4.41 per cent in October from 4.22 per cent in September, just below the record high of 4.45 in June, according to Fitch’s credit card performance index.

The rating agency said its credit card chargeoff index — which measures loans that companies do not expect to be repaid — fell to 10.09 per cent in October from 10.75 per cent in September. Delinquencies fell earlier this year thanks to tax refunds and stimulus actions. The renewed upward trend in late payments suggests credit card chargeoffs will soon start to rise again.

“Credit card delinquencies are on the rise again and cardholder defaults will re-test recent highs as we head into the new year,” Fitch Managing Director Michael Dean said in a statement. “Consumer credit quality remains under significant strain as a result of the persistent weakness in the labour markets.”

The US unemployment rate last month rose to 10.2 per cent, the first double-digit reading in 26 years. Employment services company ADP reported on Tuesday that private employers shed 169,000 jobs in November, less than in October but above some analysts’ estimates.

Fitch forecast unemployment will peak at 10.3 per cent in the second quarter of 2010 and remain above 10 per cent throughout 2010. — Reuters

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