banktime.com

After what looked like an improvement in the months of September and October, American credit card charge-offs increased again in the month of November. Analysts were frustrated this week when it was announced that the number of domestic card accounts to be written off as bad debt had increased by just over one half of a percent last month, ending a micro-streak of two months of more promising results. In November, charge-offs increased from ten percent in October to ten-point-six percent. In further sobering news, credit card delinquencies rose to over six percent in November. When the delinquency rate rises, it tends to forecast future charge-offs.

Moody’s Investor Services, which publishes the monthly credit card delinquency and charge-off numbers, estimated that the percentage of bad credit would continue into the first months of 2010. Credit card delinquencies tend to increase during the coldest months of the year in a regular seasonal trend. Moody’s thinks that credit card charge-off will hit a peak of twelve or thirteen percent around summertime before they begin to drop-off.

Moody’s also saw the payment rate fall off by almost a full percentage point in November. This figure represents what percentage of the principle balance on their credit card accounts was paid by consumers in the previous month. In October, the rate was 17.%. Last month, it tumbled to 16.4%. It remains to be seen what the actual results will be for the first few months of next year, but it is certainly to be hoped that the charge-off rate won’t get too much worse before it gets better.