Despite a few seasonal bumps over the April collection period, most U.S. credit card ABS metrics remain at or near record levels. Delinquencies plunged to new lows while excess spread reached record highs. All signs indicate that the health of U.S. consumers is improving, despite the contraction in GDP during the first quarter.
Last week's announcement regarding first quarter-2014 (1Q'14) GDP indicated that the U.S. economy contracted. According to the
According to the Conference Board, the Consumer Confidence Index increased moderately for the month of May to 83.0 from 81.7. In addition, Consumer Price Index increased 0.3 percent in April on a seasonally adjusted basis according to the
After hitting a record low in April, Fitch's Prime Credit Card 60+ Day Delinquency Index decreased another two basis points (bps) to 1.15% in May. The decline marks a milestone for the index reaching the lowest level since its launch in 1991. The index has declined 22% year-over-year (YOY) and now stands 75% below its peak level reached at the end of 2009.
While the delinquency index improved, Fitch's Prime Credit Card Chargeoff Index increased seven bps to 3.11% in May. However, the index remains down nearly 21% YOY. Notably, the Fitch Prime Chargeoff Index is now 73% below its historic high of 11.52% reached in
Consistent with seasonal trends, Fitch's Prime Credit Card Monthly Payment Rate Index declined to 26.23% in May. This index is now 12% higher YOY and well above its historical average of 17.18%. Similarly, Fitch's Prime Credit Card Gross Yield Index decreased 87 bps month-over-month (MOM) to reach 18.25% in May. Prime Gross Yield has declined every May since Fitch created its credit card ABS index back in 1991.
Fitch's Prime Credit Card Three-Month Average Excess Spread Index also set a new record during in May increasing 24 bps MOM to a new high of 13.27%.
Fitch's Prime Credit Card Index was established in 1991 and tracks over
Fitch's retail credit card indices registered positive momentum in delinquencies and MPR in May, though gross yield and chargeoffs faired less favorably. However, Fitch's Retail Credit Card Three-month Average Excess Spread Index increased 12 bps MOM to 18.60%, an all-time high for the index since its inception in 2004.
Fitch's Retail Credit Card 60+ Day Delinquency Index decreased by two bps MOM to 2.44%in May. During the same period however, Fitch's Retail Credit Card Chargeoff Index increased by 30 bps to 6.95%, increasing 4.51% MOM. However, the Retail Chargeoff index remains 50% lower than its peak of 13.41% reached in
Fitch's Retail Credit Card Gross Yield Index decreased by 87 bps to 27.52% from the previous month, a 3.06% decrease. However, Fitch's Retail Credit Card MPR Index increased by 57 bps MOM to 15.91%.
Fitch's Retail Credit Card Indices track more than
Additional information is available at 'www.fitchratings.com'.
Source: Fitch Ratings
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