The U.S. unemployment rate hit its highest level in 15 years in
November rising to 6.7%. The news is worrisome for credit card issuers
as rising unemployment rates portend rising credit card delinquencies.
During November about 533,000 jobs were cut, the biggest one-month
reduction in 34 years. Since the start of this year more than 1.9
million jobs have disappeared. More than 10.3 million Americans were
unemployed in November, the most in 25 years. Since the start of this
year 60+ days credit card delinquency has jumped 60 basis points as
unemployment rates has risen 160 basis points, according to CardData.
During the same period credit card charge-offs have increased 130 basis
points to 5.4%. It is likely fourth quarter credit card delinquency
could approach 4.0% and charge-offs could hit 6.0%.
3Q/06: 4.5% 2.5%
4Q/06: 4.6% 2.6%
1Q/07: 4.5% 2.7%
2Q/07: 4.6% 2.6%
3Q/07: 4.7% 2.7%
4Q/07: 4.9% 3.0%
1Q/08: 5.0% 3.0%
2Q/08: 5.7% 3.3%
3Q/08: 6.5% 3.6%
* 60+ days
Source: CardData (www.carddata.com)