U.S. credit card defaults rise to 20 year-high

Credit card debt is like cancer to the financial body. Issuers are jacking up interest rates to shylock levels for any reason they can think of. They are also cutting back credit lines in a big way. By doing so your FICO score drops since your "credit utilization" level increases.

Here is an example: Let's say you had a $10,000 credit line and a balance of $5,000. Your utilization is 50%. If the credit card company lowers your credit line to $7,000 now your utilization rate is 71.4%. The higher your credit utilization rate, the lower your credit rating (same is true for home equity lines of credit). Pay off your balances (highest interest cards first). Keep those credit cards for emergencies only, they are destructive to your financial well-being.-Lou

U.S. credit card defaults rise to 20 year-high

NEW YORK, March 16 (Reuters) - U.S. credit card defaults rose in February to their highest level in at least 20 years, with losses particularly severe at American Express Co (AXP.N) and Citigroup (C.N) amid a deepening recession .

AmEx, the largest U.S. charge card operator by sales volume, said its net charge-off rate -- debts companies believe they will never be able to collect -- rose to 8.70 percent in February from 8.30 percent in January.
The credit card company's shares wiped out early gains and ended down 3.3 percent as loan losses exceeded expectations. Moshe Orenbuch, an analyst at Credit Suisse, said American Express credit card losses were 10 basis points larger than forecast.

In addition, Citigroup Inc (C.N) -- one of the largest issuers of MasterCard cards -- disappointed analysts as its default rate soared to 9.33 percent in February, from 6.95 percent a month earlier, according to a report based on trusts representing a portion of securitized credit card debt.

"There is a continued deterioration. Trends in credit cards will get worse before they start getting better," said Walter Todd, a portfolio manager at Greenwood Capital Associates.

Read More:
http://www.reuters.com/article/bondsNews/idUSN1639142420090316?sp=true