Credit card chargeoffs resumed their upward trend for September, following a two-month decline, according to Fitch Investors Service.

Rising chargeoffs by Citicorp's credit card unit and Dean Witter, Discover Inc. contributed to the results, which were moderated in part by better performances by Chase Manhattan Corp. and Household Finance Corp. units.

The Fitch Credit Card Performance Index, which tracks assets behind $140 billion of credit card-backed bonds, rose to 5.37% in September from 5.15% in August.

The turnaround puts the index within 0.20 percentage point of the year's high of 5.57%, reached in June.

Banks, finance companies, and retailers take chargeoffs when consumers default and prospects for recovery are abandoned.

The chargeoff rate represents writeoffs of $626.5 million for the month. The increase from last month was expected, based on Fitch's projections for rising chargeoffs through yearend.

While chargeoffs may go higher, Fitch predicted they won't rise as quickly as in the past twelve months. Chargeoffs stood at 4.01% in September 1995.

Citicorp chargeoffs for September rose to 5.63% from 5.06% a month earlier. Discover's chargeoffs climbed to 6.48% from 5.19%.

Chargeoffs declined at Chase to 4.48% from 5.07% and at Household Affinity Trust to 5.23% from 6.45%.

This year's high chargeoff rates reflect record personal bankruptcy filings and higher levels of consumer debt, Fitch said.

Competition forced many card issuers into riskier segments to grow or maintain the size of their portfolios, the debt rating agency said, adding that banks are charging higher rates to offset the losses.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.