Chargeoffs Could Plague Credit Card Companies (NYSE: V),(NYSE: MA),(NYSE: AXP)

Visa & Mastercard

Get ready Visa, MasterCard and Amex, it may be a long haul out of the financial mess.  Shares of Visa Inc. (NYSE:V), MasterCard Incorporated (NYSE:MA) and American Express Company (NYSE:AXP) could be hurt if credit-card delinquencies continue to climb.  So, what's in your wallet?

As reported on, U.S. credit-card delinquencies continued their climb in October to near record highs, as charge-off rates are expected to continue rising, Fitch Ratings ( said Wednesday.

“Consumer credit quality remains under significant strain as a result of the persistent weakness in the labor markets,” noted managing director Michael Dean. The Labor Department will report unemployment data Friday; the jobless rate is expected to hold steady at 10.2%, the highest level in decades, while the decline in payrolls is seen mitigating from the previous month.

AMEX-CardAll types of consumer lending have worsened the past several years, with borrowers falling increasingly behind and lenders writing off many billions of dollars of owed loans.

Fitch’s credit-card performance indexes show late payments rising to their highest levels in five months and indicate higher charge-offs in the months to come.

Fitch’s index on delinquencies of at least 60 days rose to 4.41% from 4.22% in September. Late-stage delinquencies are now 31% higher than year-earlier levels and just below the record high of 4.45% in June. Delinquencies of at least 30 days rose as well.

Fitch said its Credit Card Chargeoff Index fell for the third straight month, with October’s decline of 0.66 percentage point to 10.1%. But that is still 55% above its year-earlier level. Senior director Cynthia Ullrich said the downtrend is expected to be short-lived because of the elevated delinquencies.

But borrowers who are paying are paying a larger proportion of their balance. The monthly payment rate grew 0.59 point to 18.6%, the highest since September 2008.


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