USA credit card charge offs fell in September from the record highs of August, Moody's Investors Service said on Thursday, as US consumers used their tax refunds and other economic stimulus proceeds to lower their credit card debt. But delinquencies still rose, meaning more troubles ahead for the credit card industry.
The Moody's credit card charge off index that measures credit card debts that banks do not expect to be repaid fell to 10.72 percent in September from a record high of 11.49 percent in August. As well, debt payments late more than 30 days rose to 5.97 percent from 5.80 percent.
"This improvement in the September charge off rate index is due partly to the seasonal improvement in early stage delinquencies earlier in the year," Moody's said in a statement.
The ratings agency estimated that the charge off rate index will start to stabilize during the autumn months and will resume an upward trend closer to the end of 2009 and into 2010.
"The rising delinquency rates, along with an expectation of more rising unemployment rates, will bring higher credit card debt charge offs in the months ahead," Moody's said.
Credit card losses usually closely follow the unemployment trend, which rose in September to 9.8 percent, the highest in 26 years. The rating agency estimates that the charge off rate index will peak between 12 percent and 13 percent in mid 2010.
Data that was released by companies earlier this month based on the performance of credit card loans that were securitized showed defaults declined almost across the board, with Bank of America Corp and Citigroup Inc as the worst performers among the biggest credit card issuers.
Thursday, October 22, 2009
Monday, October 12, 2009
Lower Credit Card Debt Numbers for August
Consumers have made an effort to get out of credit card debt during August according to a report from the Federal Reserve.
The Fed reported consumers credit dropped by an annual rate of 5.8 percent or $12 billion during the month. The total consumer credit amounted to $2.46 trillion.
Revolving credit of which includes credit card debt dropped by an annual rate of 13.1 percent in August to a total of $899.4 billion. Non-revolving credit, which includes car loans also fell by 1.3 percent.
The drop in revolving credit seen in August continues a trend seen since the fourth quarter of 2008 when it fell by an annual rate of 7.3 percent. The first quarter of 2009 saw revolving credit fall by 9.6 percent, while the second quarter experienced a 9.7 percent drop.
Though it may be a sign that some people are finding debt relief by paying off high interest credit cards using debt consolidation, financial experts noted the drop in revolving credit also reflects debts that have been written off by banks.
According to numbers from Fitch Ratings, the drop in revolving consumer credit may continue into the future. For September, Fitch reported that credit card defaults increased by 0.97 percentage points and accounted for 11.52 percent of all credit card accounts.
The Fed reported consumers credit dropped by an annual rate of 5.8 percent or $12 billion during the month. The total consumer credit amounted to $2.46 trillion.
Revolving credit of which includes credit card debt dropped by an annual rate of 13.1 percent in August to a total of $899.4 billion. Non-revolving credit, which includes car loans also fell by 1.3 percent.
The drop in revolving credit seen in August continues a trend seen since the fourth quarter of 2008 when it fell by an annual rate of 7.3 percent. The first quarter of 2009 saw revolving credit fall by 9.6 percent, while the second quarter experienced a 9.7 percent drop.
Though it may be a sign that some people are finding debt relief by paying off high interest credit cards using debt consolidation, financial experts noted the drop in revolving credit also reflects debts that have been written off by banks.
According to numbers from Fitch Ratings, the drop in revolving consumer credit may continue into the future. For September, Fitch reported that credit card defaults increased by 0.97 percentage points and accounted for 11.52 percent of all credit card accounts.
Thursday, October 1, 2009
Find a Life without Debt
Many of us dream of a debt-free life, but few of us actually achieve our goals. The reason? It’s not that some are more dedicated than others or that some are even smarter when it comes to money. The truth is that it is extremely hard to beat the cycle of debt once you find that you are in too far.
The culprits are many: soaring inflation and interest rates, the high cost of living, unstable job market and stagnant pay scale. But the results are the same. Many families are struggling just to make their monthly obligations. Some are even facing foreclosures, repossessions or bankruptcy. Situations like these make the idea of paying off debt a mere fantasy.
But there is a way that you can pay off your debt and break the debt cycle for good even if you don’t have any spare money at the moment. You can do it by consolidating debt through a second mortgage, debt consolidation loan or refinanced mortgage.
All of these options allow you to pay off your high-interest debt today and pay it back slowly tomorrow with a much lower interest rate. With a debt consolidation loan, you save money by getting lower interest rates and by making lower monthly payments each month. This money can then be used to finance your lifestyle without relying on debt.
Once you learn to live without incurring debt, you will be free to do anything you want with the money that you earn. No longer will you have to send out your money to pay bills as soon as it’s deposited in your account. You can hold onto that money and spend it any way you wish. It’s your money. Why not keep it where it belongs: in your pocket?
The culprits are many: soaring inflation and interest rates, the high cost of living, unstable job market and stagnant pay scale. But the results are the same. Many families are struggling just to make their monthly obligations. Some are even facing foreclosures, repossessions or bankruptcy. Situations like these make the idea of paying off debt a mere fantasy.
But there is a way that you can pay off your debt and break the debt cycle for good even if you don’t have any spare money at the moment. You can do it by consolidating debt through a second mortgage, debt consolidation loan or refinanced mortgage.
All of these options allow you to pay off your high-interest debt today and pay it back slowly tomorrow with a much lower interest rate. With a debt consolidation loan, you save money by getting lower interest rates and by making lower monthly payments each month. This money can then be used to finance your lifestyle without relying on debt.
Once you learn to live without incurring debt, you will be free to do anything you want with the money that you earn. No longer will you have to send out your money to pay bills as soon as it’s deposited in your account. You can hold onto that money and spend it any way you wish. It’s your money. Why not keep it where it belongs: in your pocket?
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