U.S. credit card losses reached 10.44% of outstanding loans in June, setting a record and eroding protection for investors in securities backed by payments from cardholders, Fitch Ratings said Wednesday.

Chargeoffs rose 62% from June of last year. While increases may slow in coming months, actual declines are not foreseen, Fitch said.

Moody's Investors Service said June 24 that writeoffs broke 10% in May for the first time in more than 20 years of record-keeping. Fitch said the trend is also putting pressure on securities backed by credit card receivables.

The excess spread "has contracted to levels not seen in more than 10 years," Fitch said. The three-month excess spread index dropped below 5% for the first time since November 1998, the company said.

Excess spread measures the difference between revenue and expenses such as coupon payments, servicing and chargeoffs. Credit card companies including Bank of America Corp., JPMorgan Chase & Co., Citigroup Inc., American Express Co. and Discover Financial Services have moved to protect investors from losses and thwart ratings cuts on asset-backed debt as delinquencies climb.

Steps have included removing poorly performing accounts from the pools and increasing the cash cushion that protects investors from losses.

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