US credit card write-offs will continue to rise in 2009
CHICAGO: US credit card write-offs will continue to increase in 2009, tracking roughly with the rising unemployment
David Nelms, Discover's chief executive, said charge-offs could be in the mid-5 per cent range in the fourth quarter and near 6 per cent in the first quarter of 2009.
Credit card companies' delinquency rates have been rising in recent quarters as the US economy has fallen into recession and unemployment has soared.
The charge-off rate at Discover, the fourth-largest US credit-card network, was 4.76 per cent in its fiscal third quarter.
Delinquencies "will tend to track with unemployment," Nelms told media after a speech to the Executives Club of Chicago. "Most agree that things will tend to get worse next year."
The US jobless rate was 6.5 per cent in October and is forecast to have risen to 6.8 per cent in November. Many economists see the rate peaking near 7.5 per cent or higher in mid to late 2009.
