Credit Card Lates Surge as Mortgage Crisis Rolls On

The mortgage mess continues to grip American consumers and now credit card issuers are beginning to feel the heat as defaults surge.

Borrowers who once relied upon their home’s equity to consolidate credit card debt are now finding fewer available financing options, forcing many to make minimum payments that may exceed their budget.

And as evidenced by a recent Associated Press analysis of financial data from the country’s largest credit card issuers, default rates are soaring, with the greatest rise among accounts more than 90 days late.

The value of credit card accounts at 17 major credit card trusts studied by the AP that were at least 30 days late rose 26 percent to $17.3 billion in October from a year earlier.

That represented more than four percent of the total outstanding principal balances owed to the trusts on credit cards that were issued by banks and retailers such as Bank of America and Wal-Mart.

Bank of America had the highest delinquency volume, with overdue accounts valued at $5 billion, while defaults in October were almost 200 percent higher than in October 2006.

Serious delinquencies are also up markedly, with some of the nation’s largest lenders reporting increases of 50 percent or more in the value of accounts that were at least 90 days delinquent compared with the same period a year ago.

The troubling trend continued in November, with all of the trusts that filed reports for the month showing increases in both delinquencies and defaults from a year ago, and many revealing sequential increases from October.

Capital One reported that the number of accounts 90 days late or more had increased between October and November, with more than 1.2 million of its 30 million accounts either delinquent or in default.

In regions where bad mortgages are concentrated, such as in California and Florida, the numbers were the highest.

Discover reported 25,716 more accounts 30 days or more delinquent from November 2006, with a 6,000 increase between October and November this year alone.

Enter credit card crisis.

Related Topics:

1. Credit Card Defaults and Charge-Offs Rise
2. Credit Card Debt on the Rise
3. Credit Card Defaults Hit Record High in August
4. Best Borrowers Defaulting on Mortgage Over Credit Card
5. U.S. Senate Subcommittee Members Slam Credit Card Issuers