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U.s. Credit Card Defaults Rise To Record In May

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U.S. credit card defaults rise to record in May

Mon Jun 15, 2009

Reuters

NEW YORK (Reuters) - U.S. credit card defaults rose to record highs in May, with a steep deterioration of Bank of America Corp's lending portfolio, in another sign that consumers remain under severe stress.

"Until lenders show stabilization then trend-bucking improvement over a several-month period, we remain bearish on credit card lenders -- and the U.S. consumer," said John Williams, an analyst at Macquarie Research.

"We continue to believe that macro challenges and credit quality concerns will pressure U.S. card issuers over the next 12 months," he added.

Credit card lenders are trying to protect themselves by tightening credit limits, raising standards and closing accounts. They have also been slashing rewards, increasing interest rates and boosting fees to cushion against further losses.

But that could come to an end soon. The U.S. government approved a law last month limiting credit card fees and interest rates, which is expected to tighten lending further and ultimately boost defaults as consumers find it harder to refinance their debts.

http://www.reuters.com/article/ousiv/idUSTRE55E5GQ20090615

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