Credit card delinquencies hit index record

For the second month in a row, a record number of U.S. consumers were late on their payments, according to Fitch.

EMAIL  |   PRINT  |   SHARE  |   RSS
 
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)
By Catherine Clifford, CNNMoney.com staff writer

What would happen if the government let some big banks fail?
  • It would devastate the global economy
  • It would send a strong message to the banking industry
  • It wouldn't make a difference
CDs & Money Market
MMA 0.40%
$10K MMA 0.35%
6 month CD 0.39%
1 yr CD 0.72%
5 yr CD 1.52%

Find personalized rates:
 

Rates provided by Bankrate.com.

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.

Talkback: Do you know any heroes of the economy? Someone like Leonard Abess, the Miami banker who shared his $60 million bonus with his employees? Or maybe someone acting on a smaller scale to help those suffering during this recession. Maybe you? Send an email to realstories@cnnmoney.com, and your nominee could be profiled in an upcoming CNNMoney.com article. To top of page

Features
They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
Coolest innovations around the world From flying cars to floating schools, these innovations are improving the lives of people around the world. More
6 luxury getaways to escape your digital life Step away from your smartphone. No Facebook or Twitter here. These are six places where luxury travel agents send clients looking to unplug and experience the ultimate digital-detox getaway. More
Most reliable cars - Consumer Reports These cars, trucks and SUVs scored best in the magazine's latest survey of vehicle owners. More
Worry about the hackers you don't know 
Crime syndicates and government organizations pose a much greater cyber threat than renegade hacker groups like Anonymous. Play
GE CEO: Bringing jobs back to the U.S. 
Jeff Immelt says the U.S. is a cost competitive market for advanced manufacturing and that GE is bringing jobs back from Mexico. Play
Hamster wheel and wedgie-powered transit 
Red Bull Creation challenges hackers and engineers to invent new modes of transportation. Play

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.