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Amid still-elevated inflation and tight financial conditions, credit card delinquencies and charge-offs rose in the fourth quarter, according to Fitch Ratings.

The rating agency reported that credit card performance deteriorated in the fourth quarter, as average late-stage delinquencies (60+ days past due) rose for the second straight quarter — almost reaching pre-pandemic levels.

Similarly, the net charge-off index was up from the prior quarter, rising to 2.77% in the fourth quarter from 2.47% in the third quarter. The fourth-quarter result was the index’s highest level since the height of the pandemic, in the second quarter of 2020 (2.97%).

“The weakening performance reflects further pressure on consumers from higher prices and interest rates as labour market conditions softened,” Fitch said.

With both credit card balances and debt servicing costs on the rise, the three-month average monthly payment rate declined to 58.34% in the fourth quarter, down from 58.82% in the third quarter.

Looking ahead, Fitch said it expects credit card performance to continue weakening “due to subdued economic growth, leading to higher unemployment in [the second half of 2024] and pressuring households’ ability to meet payment obligations.”