U.S. Credit Card Defaults Rise to Record Highs

U.S. credit card defaults increased in April to record highs, Reuters reported Friday, citing reports on the performance of credit card loans that issuers packaged into bonds and sold to investors.

» Citigroup (C) —a big issuer of MasterCard cards—reported its annualized charge-off rate hit 10.21% in April from 9.66% in March.

» Wells Fargo (WFC) said its charge-off rate increased in the double digits too, printing 10.03% from 9.68%.

» JPMorgan Chase (JPM)—a big issuer of Visa (V)cards —reported its charge-off rate rose to 8.07% from 7.13% in the previous month.

» Discover Financial Services, (DFS) the U.S. fourth-largest credit card network, said its default rate rose to 8.26% in April from 7.39% in March.

The U.S. credit card delinquency rate continues to jump. According to some analysts, loan losses could reach between $70 billion and $75 billion if credit card losses across the industry top 10%.

Let’s hope we don’t move from the mortgage crisis to the credit card crisis.

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