The U.S. credit card chargeoffs break new records as they surpass 10% and hit a sixth straight record high in May, Moody’s Investors Services said on Wednesday.
From Forbes: Credit card issuers wrote off a record portion of their loans to customers in May, citing them as uncollectible, according to Moody’s Investors Service. The charge-off rate, an annualized figure, hit 10.6%, breaking a record…and marking the first time the Moody’s Credit Card Index has surpassed 10%.
Among the largest credit-card issuers, Bank of America (BAC) fared the worst, with its uncollectible loans rising two percentage points from April. The bank reported net charge-offs of 8.6% of its credit card loans in the first quarter.
With more credit card users out of work, Bank of America, Citibank and others are likely to see the jobless rate hurt their earnings as customers miss payments and rising losses force them to set aside more capital. Economists at High Frequency Economics project an 11.1% unemployment rate in March of next year.
Moody’s senior vice president William Black said in a statement, according to Reuters, he expects “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.”