Percentage Of Credit Card Charge-offs Expected To Rise

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PaymentsSource.com has posted an article about how credit card charge-offs should reverse declining and increase to peak at 12%-13% about mid-year in 2010 if delinquencies continue to rise.

Earlier this week, Moody’s reported that U.S. credit card charge-off levels eased in October for a second straight month from a record in August, while delinquencies rose for a third consecutive month. Payment rates also improved after two months of declines.

Delinquencies give the credit card companies an estimate of how much they should set aside in reserves to counteract potential losses. The rate was 6.12% in last October, up from 5.79% in August. The total percentage of six to nine month delinquencies is up 11% from September 2008.

Moody’s October credit card index showed a drop to 10.04% in the charge-off rate, below the 11.49% all-time high set in August. The charge-off rate measures those credit card account balances written off as uncollectable by credit card firms.

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