Fitch Ratings’ Credit Card Index showed mixed results for the December collection period as credit quality measures continued above prior-year levels. Despite some signs of economic improvement in recent weeks, Fitch anticipates layoffs to continue over the near term as companies try and find ways to restore profitability, a trend that will lead to higher chargeoffs in 2002, according to the latest edition of ‘Credit Card Movers & Shakers’.
‘A prolonged recession may cause households to reign in credit card debt as consumer confidence falls,’ said Rui Pereira, Director, Fitch Ratings. ‘As such, concerns remain focused on consumers’ ability to service their debt through a prolonged downturn, particularly for more vulnerable high-risk consumer segments that have begun to exhibit weakening trends.
Fitch’s Excess Spread Index posted a third straight record high, increasing 0.38 basis point (bp) over last month to 7.44%, while the Chargeoff Index held steady with a decline of 7.0 bps from the prior month. However, Fitch’s Gross Yield Index fell to 18% from month- and year-earlier levels of 18.25% and 19.50%, respectively, its lowest level in almost five years.
For a copy of ‘Credit Card Movers & Shakers’ please visit Fitch’s web site at ‘www.fitchratings.com’ or contact Market Services at 1-800-853-4824.
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