More in U.S. Late on Credit Card Payments
story.news.yahoo.com
NEW YORK (Reuters) - More Americans fell behind on their credit card payments in April than a year ago, suggesting that consumers are straining to support their spending, Moody's Investors Services said on Friday.
Consumers, although debt heavy, do not owe so much that it will force them to sharply pull back their spending, which will be troublesome for an economy struggling to gain traction.
A stabilization in the jobs market and steady income growth will stave off borrowers from falling into a deep hole, according to economists.
Moreover, many cardholders who are also homeowners have paid down their credit card bills with money freed up from mortgage refinancings, Moody's senior credit officer, William Black, told Reuters.
"Cardholders have paid down their credit card debt with lower-cost, tax-deductible mortgage debt," Black said.
Moody's delinquency index on credit card payments 30 days past due rose to 5.25 percent in April, up from 5.04 percent a year earlier but down from March's 5.44 percent.
High payment delinquencies among cardholders have spilled into more losses for banks and retailers with subsidiaries which issue credit cards.
April's rate of charge-offs, the annualized rate that issuers write off card accounts as uncollectible, rose to its highest level in than a year.
Moody's monthly gauge of credit card charge-offs rose to 7 percent in April, up from March's 6.97 percent and year-ago's 4.75 percent.
Moody's blamed the charge-off increase to high bankruptcy filings, which a record in the first quarter at 404,154 cases.
Many issuers reported that April tends to have seasonally high bankruptcy filings, Moody's said. |
