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Debt consolidation may be a consideration as defaults on retail cards rise
By Oscar Monfort on Jun 30th, 2010
A recent report from Fitch Ratings shows that consumers continue to have trouble with their retail credit card debt.
The firm said that April saw defaults on retail credit cards increase 0.22 percentage points to rest at 13.23 percent of all accounts. When compared to the same month last year, charge offs are up 10 percent, although they are down from a 13.41 percent record high notched in February 2010.
However, delinquencies on retail cards fell, which may foretell a future drop in defaults. The number of accounts that were at least 60 days late on payment dropped 0.23 percent, while the percentage of cards 30 days behind declined 0.40 points.
One factor that could play into higher default and delinquency rates is how many people find themselves unemployed. While the jobless rate came in at 9.7 percent in May, Fitch said it expects it to peak at 9.9 percent in the second quarter.
Still, even people with jobs may find it hard to pay off the debt on their retail credit cards. One option they may consider is debt consolidation, which can bring about lower interest rates.
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