Creditnet News Story
Unemployment tied to increase in credit card delinquencies
Thursday, December 3, 2009
By Danielle Robson
More late payments could lead to future defaults.
A credit card offers opportunities for people to establish their credit, although some people seem to be having trouble paying off their debts.
According to recent numbers from Fitch Ratings, the number of card accounts that were 60 days or more delinquent increased 19 basis points to 4.41 percent during November. The report also indicates that early-stage delinquencies saw an increase during the month.
"Consumer credit quality remains under significant strain as a result of the persistent weakness in the labor markets," Fitch Ratings managing director Michael Dean said.
The unemployment rate saw a recent increase in October, jumping 0.4 percentage points to come to 10.2 percent. As unemployment increases, more people could find it difficult to pay off their credit card debts, which could also hurt their credit score.
Though late payments increased, one positive note from Fitch was the fact that credit card defaults dropped in November. Charge offs - debts lenders no longer expect to be repaid - dropped 66 basis points to 10.09 percent. However, the rise in delinquencies could indicate that defaults will increase in the coming months as consumers continue to struggle with not having a job.
| 
Subscribe | |
