Sept. 2 (Bloomberg) -- Yields relative to benchmark rates on securities backed by credit card debt rose to records amid concern that falling household income will curtail spending and make it harder for consumers to pay their bills.

Spreads on credit card asset-backed securities of different ratings and maturities rose by 10 basis points to 50 basis points during the week ended Aug. 28, according to JPMorgan Chase & Co. Credit card bonds rated AAA and maturing in five years rose 15 basis points from the week earlier to 150 basis points more than the benchmark swap rate, analysts led by Christopher Flanagan in New York wrote in an Aug. 29 report.

Investors are retreating from securities backed by credit card loans following a slowdown in consumer spending, which accounts for more than two-thirds of the U.S. economy. Delinquencies are rising as Americans rely more on the debt to cover expenses because falling home values are causing banks to restrict access to home-equity lines of credit.

``The focus is on the weakened consumer,'' Christopher Sullivan, chief investment officer at United Nations Federal Credit Union in New York, said today in a telephone interview. ``The consumer is severely pinched, and we are likely to see this trend in consumer ABS products continue.''

More than $358 billion of credit card asset-backed securities were outstanding as of the first quarter, according to the Securities Industry and Financial Markets Association. Spreads have surged as the credit crunch has damped investor appetite for all but the safest U.S. government debt.

American Express

American Express Co. paid 130 basis points more than the one-month London interbank offered rate in its last sale of AAA asset-backed debt on Aug. 8, according to data compiled by Bloomberg. The company paid 4 basis points over Libor on similar debt sold in July 2007. A basis point is 0.01 percentage point.

New York-based American Express had a credit-card delinquency rate of 3.42 percent as of July, Bloomberg data show. Uncollectible debt rose to 5.3 percent of loans from 2.9 percent a year earlier and will climb as the year progresses, American Express Chief Executive Officer Kenneth Chenault said on July 21.

Consumer purchases slowed to an increase of 0.2 percent in July, one-third the pace in June, the Commerce Department said Aug. 29. Incomes dropped 0.7 percent, the first decrease since August 2005.

U.S. consumers borrowed more than twice as much as economists forecast in June. Consumer credit rose by $14.3 billion, the most since November, to $2.59 trillion, according to the Federal Reserve.

The five-year swap rate, a borrowing benchmark, is currently 3.96 percent. One-month Libor is set at 2.49 percent.

To contact the reporter on this story: Sarah Mulholland in New York at smulholland3@bloomberg.net

Last Updated: September 2, 2008 16:51 EDT