Tuesday, August 28, 2007

Credit Card Losses in the US Up Almost 30% From Last Year

According to Market Watch credit card losses in the US are up compared to last year. Many in the financial business use credit card losses as an indicator of where consumer debt is headed. Usually higher credit card losses indicates that the consumer is having problems and losses in other debt categories could follow (i.e. auto loans, mortgages, etc.)

U.S. consumers are defaulting on credit-card payments at a significantly higher rate than last year, according to a Financial Times report citing Moody's data. Credit-card companies were forced to write off 4.58% of payments as uncollectable in the first half of 2007, almost 30% higher year-on-year, the report said. But Moody's said the rate of losses remained well below the 6.29% average seen in 2004, a year before the US enacted a new law that made filing for personal bankruptcy more onerous, the report said.