UK card issuers see record credit card charge-offs
By UK CreditCards.com
Charge-off rates at UK credit card providers are on the rise, according to analysis from ratings agencies Moody's and Fitch.
Experts at both organisations are seeing the upward trends as the recession takes its toll on customers' ability to repay debts, Reuters reports. Data from Fitch cited by the news agency showed that rates at various firms who issued UK credit card-linked securities ranged from 6.5% to 12.9%. This means that the firms have effectively given up on getting debt repaid from around one in every 10 customers.
Unemployment, which recently hit a 14-year high in the UK according to official government figures, was seen as a key driver of the increasing charge-offs.
"As the economic downturn continues to hit the UK, Fitch expects that further rises in unemployment, together with high levels of borrowing for UK consumers, will continue to exert stress on cardholders, resulting in increasing delinquencies as they struggle to meet their debt obligations," Fitch said in a release.
Meanwhile, charge-off rates noted by Moody's were found to have risen past 10% in June 2009. This is the first time that the barrier has been breached since the agency began collecting the data eight years ago.
Published: 11 August 2009
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