Wow, the credit loss numbers keep getting worse and worse. And although a lot of observers like to attribute banks slashing credit lines and jacking up rates to pending pro-consumer rule changes, the more obvious culprit is their hemorrhaging portfolios. Banks tend to close the credit gate after the horse is in the next county, and are doing their best to
bleed improve profits on their non-deadbeats.
The U.S. monthly credit card chargeoff rate surpassed 10 percent and hit a sixth straight record high in May, Moody’s Investors Services said on Wednesday, as unemployment grew to a 26-year high.
The chargeoff rate index — which measures credit card loans the banks do not expect to be repaid — rose to 10.62 percent in May from 9.97 percent in April.
“We expect the chargeoff rate index to continue to rise in the coming months but at a slower pace, as it peaks at around 12 percent in the second quarter of 2010,” Moody’s senior vice president William Black said in a statement.
The Moody’s index also showed delinquencies — monthly payments more than 30 days late — fell to 5.97 percent in May from 6.34 percent in April.
However, the agency said it was due to a seasonal trend, as consumers used tax refunds to pay back debts, and estimated delinquencies will resume their upward trend.