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The May charge-off rate for prime credit card portfolios set a record high for the third consecutive month, according to Fitch Ratings' credit card industry report released yesterday. The charge-off rate was 9.66% of outstanding receivables, 77 basis points higher than the 8.89% rate in April. Fitch expects charge-offs to surpass 10% during the next few months, with peaking unemployment rates keeping the charge-off rate elevated through the first quarter of next year. Fitch's Retail Card Delinquency Index, which measures receivables more than 60 days past due, was 4.37% in May, seven basis points lower than the previous month–the first time in five months the index has declined. "At this point, any sign of a pullback from the rate of acceleration in delinquencies is welcome news," Michael Dean, Fitch Ratings managing director, said of the index results. "Whether it develops into a trend remains to be seen, and since it will take time to work through, we expect continued increases in charge-offs over the next few months."
