Credit Cards Guide

Credit card debt continues to be an issue for consumers as more people find it difficult to get a handle on budgeting and debt management.

A recent report from Fitch Ratings shows that late payments and defaults on credit card debt increased in November. In fact, the firm’s Credit Card Index, which accounted for credit card accounts through the end of the month, showed that delinquencies reached record levels.

Card accounts more than 60 days late climbed to 4.54 percent, which sets the new bar for the highest amount of delinquencies. The previous record was set in June of last year, when delinquencies were at 4.45 percent.

Furthermore, from the fourth quarter of 2008 to the second quarter of 2009, Fitch Ratings’ delinquency index increased 42 percent, a rise that the firm tied to a difficult economic environment and high unemployment.

Charge offs have also increased, rising to 10.68 percent through the end of November and up from the 10.09 percent seen the previous month. Though high, that number is still below the record set in September of that year, when defaults came to 11.52 percent.

The company noted that because unemployment is expected to level off in 2010, charge offs shouldn’t hit the same levels seen in the previous year. However, with delinquencies on the rise, increased default percentages could be expected.

“The recent acceleration in delinquencies has not yet approached levels experienced last year,” Cynthia Ullrich, senior director with Fitch Ratings, said. “With that said, seasonal patterns dictate further delinquency increases and higher charge offs in the coming months.”

Despite defaults and delinquencies, some consumers are still trying to pay off their credit card debt. Recent numbers from the Federal Reserve show that consumer credit dropped $3.5 billion in October, and analysts expect it to fall further in the bank’s next report, set to be released this week.

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Tags: Card Debt Credit Card Debt Fitch Ratings Report