U.S. consumers defaulted on store-branded credit cards at near-record levels during the holiday season, and the trend is likely to continue this year, according to Fitch Inc.
During the November collection period, about $1 of every $8 of receivables was written off as uncollectible, according to Fitch's December Retail Credit Card Index, released Thursday. The credit rater expects retail card chargeoffs to remain high through the first half of this year.
"We do not foresee any meaningful improvement in the retail card credit quality in the coming months," said Fitch managing director Michael Dean. "U.S. consumers remain under stress on a number of fronts, most notably on the employment front, and retail card chargeoffs will continue to reflect those pressures."
The rating service's Retail Credit Card Chargeoff Index rebounded from a two-month decline, rising 1.22 percentage points from the previous month, to 12.56%. So-called late-stage delinquencies fell 15 basis points, to 5.22%.
Fitch said high unemployment levels and reduced consumer confidence will continue to hurt demand for consumer credit in 2010.