Credit-card defaults bedevil Target

Target credit -card holders are falling behind on their payments at an alarming rate, sending delinquencies within the retailer's $8.8 billion credit-card portfolio surging by more than 60 percent in the past year.

The worsening trend could force Target to limit its exposure to future losses by further tightening the credit terms to qualify for its Visa card. And that could mean a further deceleration of sales at Target, which is struggling to attract shoppers amid soft consumer spending, analysts warned. Target already has tightened its credit underwriting this year as the economy has deteriorated.

The Minneapolis-based discount retailer reported Monday that credit-card receivables written off as uncollectible, as an annualized percentage of total loans, rose to 11 percent in November, up from 10.2 percent in October and 7.05 percent a year earlier.

Moreover, accounts that were more than 60 days past due rose to 8.5 percent of Target's portfolio as of Nov. 29, up from 5.9 percent a year earlier. Delinquencies totaled $752.7 million in November, versus $469.9 million a year earlier.

Target's annualized yield for its portfolio was 24.5 percent in November, up from 23 percent in October but down from 26.4 percent a year ago.