Consumer Credit Deterioration

One of the stories of 2009 will be consumer credit (i.e. credit cards) really deteriorating. It is happening but I expect this to really pick up.

http://uk.reuters.com/article/marketsNewsUS/idUKN0748941420090107

U.S. consumer credit deteriorated in December as credit card defaults rose and cardholder payment rates suffered the largest one month drop on records hurt by a deepening recession, Fitch Ratings said in a report on Wednesday.

Fitch said the charge-off index, a measure of default, of prime credit cards rose 31 percent last month against a year ago to a four-year high of 6.84 percent. The agency expects it to reach 8 percent in 2009.

I would take the over on that estimate.

Major credit losses are big trouble for banks J.P. Morgan Chase & Co, Citigroup Inc, and Bank of America, as well as for other card issuers such as American Express Co, and Discover Financial Services.

You can also add Capital One to that list. These names are also the big losers so far of 2009 in the stock market.

Finally everyone always forgets about these:

But retailers share the pain, too. The store cards default rate jumped almost 50 percent to a three-year high of 10.51 percent. Fitch forecast the rate will surpass 12 percent by mid-2009.