In May Bank card defaults rise up to 10 % – S&P
In May there has been a fall of 5.7 % in delinquencies – S&P
S&P has seen that the defaults rise up to 10.5-12.5 %
On Tuesday it has been said by Standard & Poor’s that as unemployment grew to a 26-year high, there had been a record rise in the charge-off rate of U.S. credit cards issued by banks.
Rise In U.S. Credit Quality Index
There has been a rise of 10 percent in the U.S. credit quality index which was 6.4 % in April. The U.S. credit quality index has tracked $414.8 billion of bank card receivables backing S&P rated asset-backed securities. As compared to the last year the index has quickly raised up to 66.8 %.
Among private-label cards, there has been a rise in the defaults up to 12.2 % in May which was 11.7 % in April, while there has been a fall in delinquencies from 7.1 % to 6.9 %.
The decline in delinquencies has been attributed by the analysts to a seasonal trend, as tax refunds is being used by the consumers to pay back debts.
Credit Card losses Follow Unemployment
Credit card losses usually follow unemployment, which rose to 9.4% in May and expected to reach 10% by the end of 2009 or in early 2010.
Big Credit Card Companies Faced Credit Losses
Big credit loses have been shown by two companies the American Express Co, the largest U.S. credit card company by sales volume, and also Citigroup Inc which is considered to be the largest issuer of MasterCard branded credit cards.
However the default rates shown by, top Visa-branded credit card issuer JPMorgan Chase and Co, Discover Financial Services and Capital One Financial Corp ,were quite better than expected.
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