In fact, the number of accounts with delinquencies of more than 60 days hit a new record during November, climbing to 4.54 percent. The previous record for delinquencies was set in June of 2009.
One of the dangers involved with an increase in delinquencies is that it could lead to further defaults on credit card debt accounts. Through the end of November, charge offs – which are card accounts lenders no longer expect to be repaid – increased from 10.09 to 10.68 percent. Though that does not break the record set in September 2009, charge offs could continue to go up as delinquencies are on the rise.
Further complicating matters for the credit card industry is the fact that the unemployment rate continues to remain high. December’s unemployment rate stood at 10 percent according to U.S. Bureau of Labor Statistics, which is unchanged from the rate seen in November.
However, a number of financial organizations expect that the rate of joblessness will at least remain at 10 percent for much of 2010. In fact, Fitch reported it expects the unemployment rate to peak at 10.4 percent during the second quarter. Meanwhile, the Mortgage Bankers Association said it expects unemployment to peak at 10.3 percent during the first quarter this year before sinking back down to 10 percent by the end of 2010.
If unemployment rises, it could mean that more people will lack the means to be able to pay off their credit card debt. Experts have noted that people should focus on developing an emergency fund in the case that they may find themselves without work. Doing so could help consumers continue to pay bills even if they lose their job.
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