Credit Quality Warning

The September Fitch Credit Card Performance Indexes began to signal a warning to card issuers and other creditors that credit quality may be worsening. Although chargeoffs established a new four-year low for the third consecutive month, delinquencies began rising for the first time in five months and payment rates slowed. The good news first: chargeoff levels in July, 2000 were more than 25% below their mid-1997 peak, and the index's string of year-over-year improvements reached 25 months. The July chargeoff percentage in the Fitch aggregated pool of securitized card receivables was 5.02%, more than 50 basis points below the level one year earlier.

However, the Fitch delinquency index (tracking card balances 60+ days past due) rose 8 basis points from the June index level, although it remained 11 basis points below the level in July, 1999. In addition, personal bankruptcy filings in August totaled 110,196, vs. 103,603 during August, 1999. This jump in filings marked the end of a string of 21 consecutive year-over-year declines in personal bankruptcy filings.