Credit woes continue, for now

People are not paying their bills, which is resulting in increased delinquency and charge-off trends in Target’s credit card business.

In November, delinquencies as a percentage of receivables 90 days past due increased to 5.84%, compared with the company’s 12-month average of 4.57%. Meanwhile, charge-offs as a percentage of average receivables increased to 10.64%, compared with an average of 8.41% during the past 12 months.

Analysts expect the credit situation to worsen in the months ahead, and the company also recognized that likelihood last month, when it announced an increase to its reserve to prepare itself for further increases in delinquency rates and charge-offs.