Charge-offs on credit card rose about half of a percentage point in November, according to Moody’s Investors Service This ended the slight improvement in chargebacks trending which happened for the two months prior.  The credit card delinquency rate in November rose to 6.2%.  The charge back rate was 10.56%.

With the current economic climate, credit card issuers expect chargebacks to stay high for the the foreseeable future.  The rise will be particularly steep for the first quarter of 2010 and then level off, although still remaining high.

Card issuers began tightening underwriting standards for credit issuing about 18 months ago.  This will help lower delinquencies because there is substantially less credit available than before the meltdown.  Today’s credit card holders are a better risk and more likely to replay their debts.

However, even though sub-prime lending may be thing of the past, the increased unemployment rates are bound to impact even the best credit risks.  Until the economy makes a strong turn-around, including stabilizing employment, credit card defaults will continue to be a major problem for issuing banks.   And, there are many fewer debt-buying companies today than there were a few years again, limiting the market for bad debt portfolio sales.

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