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Check Cashers Are a Better Choice for Some Consumers

Mercator Advisory Group by Mercator Advisory Group
September 17, 2013
in Analysts Coverage
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My Imaginary Payment Network Is 1,000 Times Faster Than Visa’s

My Imaginary Payment Network Is 1,000 Times Faster Than Visa’s

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Based on recent measures of securitized credit card assets, chargeoffs and delinquencies continue to improve despite being are already-low levels. Fitch’s Prime Credit Card measures, based on securitized pools of prime accounts from the leading United States issuers, is showing particular strength:

Fitch’s Prime Credit Card Chargeoff Index declined 30 basis points (bps) in February following a temporary increase in the prior month. Chargeoffs are now at a new six year low. Losses decreased to 3.88% from 4.18%. Chargeoff rates improved at 26% lower from the same period last year.

According to Fitch’s 60+ Day Delinquency Index, late payments dropped two bps. Delinquencies declined to 1.61%, the lowest level since Fitch launched its prime index in 1991. This improvement has pushed late stage delinquencies 65% below peak levels reached at the end of 2009.

Private label ABS portfolios, drawing from the leading issuers, also shows improvement in 2013:

Performance of Fitch’s Retail Credit Card Index also improved. Both chargeoffs and delinquencies declined. Gross retail chargeoffs dropped 37 bps to 6.05%, approximately 19% lower than the previous year’s results. Late stage retail delinquencies increased seven bps to 2.69%, a 21% improvement compared to levels during the same period last year.

After peaking in 2009-2010, delinquencies and chargeoffs have improved along with the U.S. economy. Not to be underestimated, however, are the after-effects of the massive house-cleaning of accounts done by issuers during the economic downturn.

Also, accounts originated during and since the downturn have typically been underwritten to very high standards and have focused on prime/superprime consumers. As these accounts mature, there may be occasional increases in delinquencies and chargeoffs, but chances are this period of enhanced underwriting will drive strong account performance for some time.

Click here to read more from Fitch.

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