Credit card delinquencies hit index record

NEW YORK (CNNMoney.com) -- Cash-strapped American consumers are not paying credit card bills on time, sending delinquency rates to their second straight record high in a report compiled by a credit rating agency.

Fitch's Prime Credit Card Delinquency Index measures credit card debt more than 60 days late through January, and it surged to a record 4.04% in the most recent month, trumping the 3.75% record set in the previous month.

During the last three months, the index has climbed 23%, putting the index 30% above historical averages. Fitch started the Prime Credit Card Index in 1991.

"Record credit card delinquencies are just the latest sign that U.S. consumers are under considerable levels of stress," said Fitch managing director Michael Dean in a written statement.

Record delinquency rates are a harbinger of record default rates, according to the report.

"The latest numbers point to even higher default rates and worsening consumer credit quality measures in the coming months," said Dean.

When a payment is 180 days late or within 60 days of a bankruptcy filing, credit card companies consider a debt a "chargeoff," indicating that the payment is uncollectable.

As consumers are late making payments, the industry charge-off rates. Total chargeoffs were at 7.40% at the end of January.

"As the unemployment rate accelerates and consumers' ability to service their debt weakens, Fitch anticipates that gross chargeoffs will surpass 8.5% by mid-year and approach 9% by year end," said Cynthia Ullrich, senior director of Fitch's consumer asset-backed securities unit, in a written statement.

The amount that consumers are putting toward their credit card debt each month has slowed. The monthly payment rate was 17.15% in January, lower than the 20% rate from 2006 and 2007, according to Fitch. The monthly payment rate has averaged 16% since the Fitch Prime Credit Card Index started.

Consumers have been holding back on their spending as the recession grabs hold. With the unemployment rate at 8.1%, a 25-year high, Americans are hoarding cash for fear of a pink slip. And with the Dow Jones Industrial average and the S&P 500 bouncing off 12-year lows and home prices sinking across the nation, consumers have watched their wealth deteriorate.

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