Analysis: U.S. Credit Card Defaults High
Analysis: U.S. credit card defaults high
http://news.xinhuanet.com/english/20...nt_7303382.htm
www.chinaview.cn 2007-12-24 11:31:43
BEIJING, Dec. 24 (Xinhuanet) -- An Associated Press analysis of financial data from the country's largest card issuers shows that Americans are falling behind on their payments at an alarming rate.
It results in a surge of delinquencies and defaults by double-digit percentages in the last year, indicating that the problems are about to get a lot worse.
The analysis also found that the greatest rise was among accounts more than 90 days in arrears.
Experts said these signs of the deterioration of finances of many households are partly a byproduct of the subprime mortgage crisis and could spell more trouble ahead for an already sputtering economy.
"Debt eventually leaks into other areas, whether it starts with the mortgage and goes to the credit card or vice versa," said Cliff Tan, a visiting scholar at Stanford University and an expert on credit risk. "We're starting to see leaks now."
The value of credit card accounts at least 30 days late jumped 26 percent to 17.3 billion U.S. dollars in October from a year earlier at 17 large credit card trusts examined by AP.
Meanwhile, defaults rose 18 percent to almost 961 million dollars in October, according to filings made by the trusts with the Securities and Exchange Commission.
The analyzed data represents about 325 million individual accounts held in trusts, similar to how many banks packaged and sold subprime mortgage loans.
Together, they represent about 45 percent of the 920 billion dollars the Federal Reserve counts as credit card debt owed by Americans.
Many economists expect delinquencies and defaults to rise further after the holiday shopping season.
"Credit card quality will continue to erode throughout next year," said Mark Zandi, chief economist and co-founder of Moody's Economy.com Inc.
