More People Will Fall Behind On Their Credit Cards This Year, Says Rating Agency

19 Feb More People Will Fall Behind On Their Credit Cards This Year, Says Rating Agency

Rating agency Moody’s has recently given a negative outlook to the U.S. credit card sector. In its report, “2007 Review and 2008 Outlook: US Credit Card-Backed Securities,” Moody’s noted that although delinquencies and charge-offs are on the rise in credit card accounts, the levels are still nowhere near all-time highs. Current charge-off levels are still below long-term averages.

Moody’s expects a rise in delinquencies and charge-offs over 2008, but how far they will rise depends on the economy. And the impact will be felt on a bank-by-bank basis.

William Black, Moody’s SVP and author of the report, noted that contractual charge-offs should rise “significantly” in 2008. A contractual charge-off occurs when a cardholder falls behind on payments by 180 days, prompting the issuer to write-off the debt.

Source: InsideARM.com

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Jay S. Fleischman is a bankruptcy lawyer with offices in Los Angeles and New York. He can often be found on Google+ and Twitter, where he shares information about consumer protection issues and personal finance.
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