Credit Card Delinquencies and Charge-Offs Soaring: AP Study

 
U.S. consumers have been falling behind on credit card payments in the last year, prompting double-digit growth in the percentage of delinquent and charged-off accounts over that time period, according to an analysis from the Associated Press.

The largest growth was in accounts that are 90 days or more late in payments which could mean that the worst is still to come, say some experts.

The AP examined credit card trusts from 17 large credit card issuers and compared the numbers from October 2006 to October of this year. The accounts covered in the analysis make up about 45 percent of all outstanding credit card accounts in the country.

The news organization found that the value of credit card accounts that were at least 30 days late in payments jumped 26 percent in the period. The total value of these delinquent accounts was $17.3 billion. Charge-offs rose 18 percent to a total of $961 million.

Anecdotal evidence from the AP showed that a handful of large issuers – including Advanta, GE Money and HSBC – reported increases of more than 50 percent in accounts that are 90 days or more delinquent.

Other card issuers named in the study include Bank of America, JPMorgan Chase, Capital One, American Express and Discover Financial. Retailer-branded private label cards from Wal-Mart, Home Depot, Lowe’s, Target and Circuit City were also covered.

JPMorgan Chase was the only issuer to buck the trend, with its trust showing a decline in delinquencies and charge-offs from October 2006 to October 2007.

Mark Zandi, chief economist of Moody’s Economy.com, told the AP that the mortgage meltdown and subsequent crunch in real estate values is a main driver for the poor card performance, and that the problems would continue.

"Credit card quality will continue to erode throughout next year," Zandi said.