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August 22, 2014

US credit card metrics will remain near record levels, says Fitch

Chargeoffs, delinquencies and monthly payment rates (MPR) in the US will continue their drive to rarely seen levels in the short term, according to Fitch Ratings.

By Verdict Staff

Chargeoffs, delinquencies and monthly payment rates (MPR) in the US will continue their drive to rarely seen levels in the short term, according to Fitch Ratings.

The rating agency expects both the prime and retail indices to continue their respective record-setting trajectories.

The Federal Reserve Bank of New York in its recent report revealed that the number of credit inquiries in the first half of the year increased only slightly, indicating credit card borrowing remains tepid. The data also shows outstanding credit card debt has been flat for more than two years.

The rating agency added that its prime indices will again hold near record levels.

"We expect prime chargeoffs to rise slightly after setting their all-time record last month. Delinquencies over 60 days old will also rise slightly from recent all-time lows. We expect prime gross yield and MPR to rise slightly, with the latter in line with the seasonal trends we have observed," the agency said in a statement.

The rating agency also predicted that retail chargeoffs could decrease to levels not seen since 2006 and may test record lows.

"We believe 60-plus day delinquencies will increase slightly but remain historically low. Retail gross yield will likely decrease this month while retail MPR will rise slightly," the statement added.

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