CREDIT CARD DEFAULT RATES SOAR- BANKRUPTCIES RISE

November 3, 2007

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Associated Press

NEW YORK – With more Americans filing for bankruptcy again after last year’s hiatus, credit card default rates are spiking.

Though the percentage of payments being written off as uncollectable isn’t as high as it was a couple years ago, the conditions are ripe for it to catch up. Bankruptcy filings keep pouring in, home prices continue to fall and energy prices remain high.

According to data from Moody’s Investors Service, credit card companies wrote off 4.58 percent of payments between January and May, up nearly 30 percent from the same period in 2006.

“In 2007, we expected an increase, as bankruptcy filings returned to more normal levels,” said Jay Eisbruck, managing director in Moody’s Investors Service Asset-Backed Finance Group. He called this year’s resurgence in bankruptcy filings the primary reason credit card default rates have soared.

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Credit Card Default Rates Soar- Bankruptcies Rise