Credit card delinquencies decrease with defaults set to rise further

According to Fitch Ratings, credit card defaults` increase to record highs in April was caused by the growth of unemployment and a deep recession. However, delinquencies dropped for the first time in five months, suggesting losses could stabilize in the coming month.

Thus, comparing with the results from a year ago, Fitch's prime credit card chargeoff index rose 77 basis points to 9.66 percent and amounted to 51 percent.

Besides, Fitch expects continued increases in chargeoffs to exceed 10 percent over the next few months and to remain raised through the first quarter of 2010, while unemployment is expected to peak. If credit card losses across the industry surpass 10 percent this year, loan losses could top $70 billion.

The rating agency`s delinquency index, which is considered an indicator of future credit losses for card companies, decreased 7 points to 4.37 percent.

Referring to the report of American Express Co, Citigroup Inc and Bank of America Corp, credit card default rates increased over 10 percent in April.