Fitch: Higher Chargeoffs for Christmas for U.S. Credit Card ABS

Another record push of bankruptcy filings this month, coupled with typical holiday seasonal trends, point to significantly higher chargeoffs for U.S. credit card ABS into next year, according to Fitch Ratings in the latest edition of ‘Credit Card Movers & Shakers’.

“Bankruptcy filing volume shattered records this month as over 200,000 filings were recorded for the week of October 15, and over 300,000 filings were recorded for the week of October 21, compared to a weekly average of 30 to 35,000 filings,” said Cynthia Ullrich, Director, Fitch Ratings. “The October filings will show up as higher chargeoffs for December and January, though chargeoff rates will normalize towards the end of the first quarter of 2005.”

The excess spread in the Fitch Prime Index is 6.35%, essentially unchanged from one year ago, while the Fitch Subprime Index it is at 8.60%, which is 232 basis points higher than one year ago. The improvement in the subprime excess spread has been driven primarily by a 500bps decrease in charge-offs year over year.

The latest edition of ‘Credit Card Movers & Shakers,’ which covers the latest trends in the credit card ABS market, is available on the Fitch Ratings web site at www.fitchratings.com in the ‘ABS’ sector page under ‘Newsletters’.