Credit card issuers are facing mounting losses as more and more cardholders fall behind on payments, a recent report finds.
According to Fitch Ratings, a New York-based credit rating agency, credit card issuers can expect to continue struggling with delinquent accounts for the rest of this year, with losses potentially reaching all-time highs in 2009.
The report cites rising unemployment, higher energy prices and fewer refinancing options as the main reasons cardholders are missing payments.
While last month's $700 billion financial market rescue plan is expected to ease the funding strain for some issuers, others have tried to offset losses through an increase in contingent liquidity and higher capital levels, the report said.
Studies show about a quarter of the nation's small-business startups are funded by credit cards. A continued economic downturn could result in lower credit ratings, the report said.