US Credit Card Delinquencies Continue at Record Highs
U.S. consumers continue to fall behind and default on their credit cards at record rates and excess spread has contracted to levels not seen in more than 10 years, according to the latest Credit Card Indexes from Fitch Ratings.
The results show Fitch’s three-month excess spread index falling below the 5% threshold for the first time since November 1998.
“At 10.44%, May’s chargeoffs are 62% higher on a year-over-year basis. Meanwhile, 60-plus day delinquencies reversed course to set yet another record high at 4.45% this month after dropping 7 basis points (bps) in May, the first improvement seen in five months.”
Fitch’s Delinquency Index, which measures the percentage of credit card receivables that were reported more than 60 days past due, has increased 23% in the past six months. The 8 bps increase was the smallest monthly increase in the last six months.
Given delinquency and bankruptcy trends, Fitch expects chargeoff increases to decelerate in the coming quarter, although actual improvements are not foreseen at this time.
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