Moody’s Investors Services’ Credit Card Index for November showed that charge offs increased to 10.56 percent during the month. The two months before saw charge offs drop, with October posting a rate of 10.04 percent.
The firm noted that it expects charge offs – or credit card card debts that lenders deem uncollectable – will reach a high of between 12 to 13 percent during the middle of 2010.
One of the things that could lead to a further increase in the number of credit card defaults is a rise in account delinquencies. Like charge offs, delinquencies of 30 to 180 days rose to 6.2 percent in November after coming in at 6.1 percent the previous month.
However, the Moody’s index also showed that early-stage delinquencies dropped to 1.6 percent in November.
Many experts have noted that one of the driving forces behind a number of different loan delinquencies and defaults is unemployment. The most recent statistics available from the government show that the unemployment rate is at 10 percent in the country, with many expecting it to remain at that level for much of 2010.
And as consumers find it more difficult to pay off their credit card debt, lenders are also making efforts to reduce their risk in a more difficult credit market. Some have upped their credit score requirements for accounts, while others are implementing account changes.
These changes are also in anticipation of new account regulations put forward by the Credit Card Accountability, Responsibility and Disclosure Act. A few of its provisions took effect in August, though the bulk of them are slated to start in February 2010.
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