Credit cards: rising bad debts in Canada

The cancellation rate for bad debts on credit cards reached a record level of 4.8% in Canada, according to rating agency Moody's.
The agency also states that this figure will increase in coming months, but at a slower pace than that displayed since the beginning of the year. The rate of radiation is the portion of loans that the companies issuing credit cards like Visa and MasterCard say not be able to recover and therefore they count as losses.
Moody's said that the rate of bad debt write-off is in direct correlation with the unemployment rate, which itself is associated with an increase in requests for personal bankruptcy. In Canada, unemployment reached 8.7% in August and should reach a peak of 9.6% during the second quarter of 2010, at the same time the radiation levels will reach its highest level, says Moody's. At 4.8%, the rate of cancellation is up nearly 60% over the rate of 3.07% a year ago. This is one tenth consecutive quarterly increase. In comparison, this rate reached 10.45% in the United States, up 65% yoy and 8.71% in the United Kingdom, up 33%.