U.S. credit card ABS chargeoffs rebounded in December after 6 months of declines while delinquencies continued decline, according to Fitch Ratings. Payments 60+ Day Delinquent dropped 10 basis points (bps) after coming to a halt for the last three months, down 1.63% to a new historical low, pushing late stage delinquencies 64% below peak 2009 levels.
Fitch’s Prime Credit Card Chargeoff Index rose 20 bps during the same period following a temporary decline in the prior month. Losses normalized to 4.18% from 3.98% after breaking below levels not observed since 2006. Chargeoff rates, following a year-long trend of declining delinquencies, ended 2012 22% lower from the same period last year. Three-month average excess spread measures also reached new heights to round out the year by increasing its ninth consecutive month. Excess spread is now at an all-time high of 11.64%. The recent improvement in excess spread levels are almost doubled when compared to its long term index average of roughly 6%.