Moody's sees peak of 12 pct in credit card losses

NEW YORK, April 28 (Reuters) - Moody's Investors Service raised its estimate for credit card losses on Tuesday, saying mounting joblessness and financially stressed consumers would mean borrowers will struggle to make their payments.

Moody's expects charge-offs, the writedown of uncollectable debt by credit card firms, to peak at 12 percent in 2010's first half, up from its initial 10.5 percent forecast. The revised forecast also assumes unemployment peaking at about 10 percent during that same period, it said.

"With little indication of unemployment rates peaking until at least sometime in 2010, a double-digit charge-off rate for the industry is a practical certainty, and is likely to be reached by the middle of this year," said Moody's in a report.

A jump of 50 basis points in March's charge-off index to a record high 9.30 percent was largely unprecedented, the agency said.

"Aside from the fourth quarter of 2005, when changes to bankruptcy legislation induced a sharp rise in charge-offs, the pace of increase in the first quarter of 2009 represents the greatest quarterly increase in the charge-off rate index ever posted," said Moody's. "Not coincidentally, the unemployment rate is also rising sharply," the rating agency added.

In March, the U.S. unemployment rate reached 8.5 percent, its highest level since 1983.

"In such a difficult macroeconomic environment, it is our expectation that no issuer will be immune from significant increases in their trust charge-off rates throughout the remainder of the year," said Moody's.

In another sign of consumer financial stress, the delinquency rate advanced to an all-time high of 6.40 percent. Usually, the delinquency rate falls during this time of year as consumers use tax refunds to pay down debt.

"That seasonal trend did not materialize this March," said Moody's. It added that this year had the largest increase ever recorded from February to March, and was only the second year, besides 2008, when delinquency rates did not experience a February-to-March decline.