Credit Card Defaults Hit 18-Month Low

September credit card default rates fell to their lowest levels since the height of the financial crisis, Fitch says.
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) -- Credit card default rates in September fell to their lowest levels since the height of the financial crisis, according to

Fitch Ratings


According to Fitch's Credit Card Index, delinquency rates improved, hitting a two-year low, while defaults declined to a level not seen in 18 months.

Late-stage credit card delinquencies improved for the ninth consecutive month, down 72 basis points or 17% from the comparable period in 2009, Fitch says. Delinquencies that were at least 60 days late fell by just 6 basis points but reached a new two-year low of 3.50%. Those delinquencies in early stages -- 30 days late -- fell by 1 basis point to 4.61%.

Charged off credit card loans fell below the 10% mark to 9.22%, after a brief uptick in August, Fitch says. Compared to a year earlier, credit card defaults declined 14%.

"Although still high on a historical basis, credit card defaults have been relatively stable albeit over the last few months while delinquencies have improved considerably," Fitch managing director Michael Dean said in a statement. "To the extent we

saw some improvement in the employment situation, particularly on the new jobless claims front, we could foresee further improvements

in charge offs."

Fitch's Prime Credit Card Index tracks more than $200 billion of prime credit card asset-backed securities backed by roughly $287 billion of principal receivables, Fitch says. It is primarily comprised of credit card portfolios from

Bank of America

(BAC) - Get Report



(C) - Get Report


JPMorgan Chase

(JPM) - Get Report


Capital One

(COF) - Get Report


Discover Financial

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, and



, among others.

Fitch expects senior credit card asset-backed securities to remain stable given "available credit enhancement, loss coverage multiples and structural protections afforded investors," it says. However, the outlook for lower tranches still remains more negative, according to Fitch.

In terms of monthly payment rates, also tracked by Fitch, performance slowed somewhat in September, after four consecutive months of improvement, Fitch says.

"Monthly payment rates have been resilient despite the lack of credit availability in the wake of the mortgage crisis," Fitch senior director Cynthia Ullrich. "Though consumers are spending less, the percentage of cardholders who are charging rather than revolving has not changed significantly."

Monthly performance in the retail credit card asset-backed securities was mixed - charge offs improved, but delinquencies worsened in September, Fitch says. Its Retail Credit Card Index tracks approximately $41 billion of retail or private label credit card asset-backed securities backed by $53 billion worth of principal receivables from the private label portfolios originated and serviced by Citi, GE Money Bank, HSBC Bank Nevada and World Financial Network.

Retailers included in the programs include


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Home Depot

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J.C. Penney

(JCP) - Get Report

, and others.

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Laurie Kulikowski


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