Two bellwethers of American consumer sentiment signaled this week that the United States credit card industry hasn't seen the last of economic trouble. Credit rating agency Standard & Poor's released findings from its credit card index, which measures the quality of consumer lenders' debt portfolios. S&P's July numbers show that fewer Americans abandoned their credit card payments, with only 9.8% of cardholders slipping into default. In recent months, the figure had drifted as high as 10.4%
S&P analysts attribute the drop to a final wave of tax refunds, corporate bonuses, and severance payments. Estimating that unemployment could rise above 12%, the agency warned its subscribers to prepare for credit card default rates as high as 13% over the next two years. The alert coincides with a 38.1 score on the Consumer Reports Sentiment Index, the lowest score in nearly a year. Editors at the Consumers Union publication reported that respondents to its survey cited credit card finance charges and service fees as a major cause for distress.
About the Author
Joe Taylor Jr. is an internal business consultant for a Fortune 500 company, who writes about finance, culture, and design. He holds a Bachelor of Science in Communications from Ithaca College.