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Average credit card charge-off rates surpassed 10% in May, Moody's Investors Service reported today. It is the first time charge-off rates broke 10% in more than 20 years that Moody's has been tracking the data, the company said. Moody's Credit Card Index, which measures the annualized charge-off rate on prime credit card receivables, rose to 10.62%, its sixth consecutive monthly increase. The index is more than 400 basis points higher than it was a year ago. Moody's says its charge-off forecast remains unchanged; it expects charge-offs to peak at about 12% during the second quarter. The delinquency rate for prime credit card accounts at least 30 days past due declined in May for the second consecutive month to 5.97%, caused most likely by a seasonal phenomenon related to tax refunds, Moody's says. "We expect delinquencies will soon resume an increasing trajectory and quickly erase the seasonal improvements that have been posted in the last two months," Moody's researchers wrote.
