Credit Card Chargeoffs Rise

The year-over-year deterioration in credit card performance continues to worsen. According to Standard and Poor's Credit Card Quality Indexes, the chargeoff rate on its pool of $365 billion in credit card receivables in August was 6.5 percent, up 140 basis points from a year earlier. Delinquencies in the pool rose to 5.1 percent, up 90 basis points from one year earlier. Not surprisingly, Standard and Poor's expects significant deterioration in payment and loss performance in the coming months since none of the negative economic impact of the terrorist attacks of September 11 are yet reflected in the performance statistics. The rating agency now expects the loss rate to spike to 7.0-8.4 percent by 2002.

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