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The charge-off rate of prime credit card portfolios reached a record high for the fifth time in the past six months, according to Fitch's Prime Credit Card Index results.
"Overall stress on consumers remains high and employment trends are still weak," Michael Dean, Fitch Ratings' managing director, said in the report. "As a result, charge-offs will remain elevated until we see improvement in the unemployment rate and more meaningful declines in delinquencies."
Charge-offs on prime credit card portfolios in September reached 11.52% of outstanding receivables, 97 basis points higher than the previous month's 10.55%. A basis point is one-hundredth of a percentage point.
Delinquencies in excess of 60 days continue to fall with Fitch's Delinquency Index decreasing to 4.06%, 20 basis points lower than 4.26% in the previous month. However, Fitch says delinquencies in excess of 30 days have not shown similar improvement and remain elevated around 5.5%.
"With recent volatility in bankruptcy filings and continued further increases in unemployment likely, Fitch expects more record-setting charge-off and delinquency metrics in the months ahead," Cynthia Ullrich, Fitch Ratings' senior director, said in the report.
