If holiday sales prospects look bleak, the retail credit card aftermath looks grimmer, the latest Fitch Ratings Credit Card Index shows. Since August, 60-plus-day delinquencies have jumped 24 percent to 4.8 percent, and Fitch expects first-half 2009 charge-offs to reach 12 percent, up from the current 9.1 percent level. The current charge-off index exceeds 2007 levels by more than 40 percent. Fitch notes that 2005-2007 results “were extremely favorable following passage of the Bankruptcy Reform Act.”
“Rising delinquencies will pressure card issuers and their retail partners during the coming year as Fitch expects a scenario akin to nearly one in eight cardholders defaulting on the store cards,” according to Fitch managing director Mike Dean. Fitch has built these default expectations into its analyses and “negative retail ABS rating actions are not expected in the near term,” Dean says.