Consumer Credit Delinquencies Likely to Rise

   

Posted: May 6, 2009

Fitch Ratings is predicting that tough economic conditions will continue to affect consumer credit card companies well into next year.

According to the company, increasing unemployment, combined with lower credit spending and higher delinquency levels, will continue to challenge the credit card industry.

"Recent revisions to unemployment expectations, following the unexpected pace of deterioration in the first quarter, indicate that significant pressure on card credit metrics will remain over the balance of 2009 and into 2010," said Meghan Crowe of Fitch in a statement.

The company noted that purchase volume among the top six card issuers had fallen five percent in the fourth quarter of 2008 and 14.2 percent in the first quarter of 2009, going on to predict that this trend would continue for the rest of the year.

Elsewhere, a report by Dow Jones Newswires said that Fitch is calling for the credit card charge-off rate, which generally refers to accounts that are written off after 180 days, to reach 10 percent by this time next year. This is likely to result in a further deterioration of credit scores for many consumers.