Find the best credit card offers online.The last year has been tough for consumers. With the economic crisis and the rise of unemployment, many consumers found themselves in deep debt. Analysts from Fitch Ratings project that the struggles consumers are having with debt will continue in 2010, especially as the unemployment rate nationwide continues to remain high.
This holiday season, consumers were a bit more reserved in their spending and a large number tried to move away from credit card spending, opting to use cash or debit cards instead. Despite these changes, Fitch Ratings still report that credit card delinquent balances rose to record levels during December. Credit card defaults rose as well. For the December index, payment rates for delinquencies over 60 days rose to an all tome high of 4.54%. The December index is based on the previous month’s performance data – November’s. The rate hike went over the June’s rate which was previously the highest rate recorded – 4.45%.
December also saw an increase in charge offs. Charge offs are loans that banks do not expect to get paid. The rate rose to 10.68% for December. The rate for November was at 10.09%. The rate is still below the record high seen on September of 2009, however. During that month, the charge offs rate was at 11.52%. Michale Dean, Managing Director of Fitch Ratings says that, as consumers continue to have trouble with their debt burdens and with the unemployment rate making things worse, the charge off rates will trend higher during the coming months. Analysts from Fitch Ratings expect that the unemployment rating will get to its highest level during the second quarter of 2010. During the whole year, the rate will also remain higher than 10%.
Since charge off rates peaked during the third quarter of last year, reaching 11.52% in September of 2009, it has been slowly receding. The current trending does point to charge off increases but analysts do not anticipate the rate to deteriorate further than it already has. This is primarily due to the expectation that unemployment will soon plateau this year.
The Credit CARD Act also has credit card companies raising their interest rates in an effort to get ahead of restraints the new credit law will bring. The result has been a considerable increase in the gross yield, measure of revenue collected from outstanding balances in the form of fees, interests and other charges. Because of this, the Prime Gross Yield index of Fitch Ratings surpassed 20%, reaching 20.2%, since April 2001.
On the other hand, monthly payment rates have dropped to 17.64% from 18.57% during the previous month. The current rates are low compared to the monthly payment rate indexes of 2006 and 2007 which regularly went over 20%.
