Credit Card Chargeoffs Are Rising

The chargeoff rate in the $335 billion pool of credit card receivables rated by Moody's Investors Services rose in May to 6.6 percent, up from 6.02 percent in May, 2000. This was the fourth consecutive month of year-over-year increases in the chargeoff rate. Delinquencies were up in May by 15 percent from one year earlier, the sixth consecutive year-over-year increase. Chargeoff rates are approaching the levels last seen in late 1996-early 1997, a period which triggered, at least for a time, tighter underwriting standards by major card issuers. The chart below tracks both series beginning just prior to the recession of 1990-91.

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