The Next "Crisis"? Credit Card Debt

[kstar]

FYI.

Innovest, which was early with its call on sub-prime mortgages, has determined that what Wall Street and the Federal government are diagnosing as a mortgage problem is, in fact, a symptom of a deeper crisis of deteriorated consumer financial health. For nearly a decade Americans have been taking on more debt while their savings and real wages have declined. (Figure 1 and 2).

The free report can be requested at this URL:
http://www.innovestgroup.com/index.php?option=com_content&task=view&id=193&Itemid=61

[kstar]

Above linked from here: http://redtape.msnbc.com/2008/10/credit-cards-at.html?GT1=43001

Excerpt:

The report by the research firm Innovest Strategic Value Advisors, titled "Credit Cards at the Tipping Point," predicts that fallout from the credit crunch will lead to a sharp increase in credit card defaults in the coming year, making $1 out of every $10 owed on credit cards impossible to collect. That will force banks to write off nearly $100 billion in credit card debt, it said.

"A long build-up in consumer indebtedness, deteriorating economic conditions and a potential 'sudden stop' in credit availability could cause charge-offs to rise dramatically into 2009," the report says.

Misleading practices by credit card issuers will come back to bite them, say report author Gregory Larkin and Laura Nishikawa, as uninformed consumers who wind up facing surprise interest rate hikes and fees will be more likely to default on their loans. The report concludes that Capital One is most at risk, due in part to its aggressive marketing and "fee-trapping" strategies.

"The data points to an unsustainable business model based on penalty pricing, and the company is worst-in-class by Innovest standards," the report said.

[jyl]

I hadn't realized, until reading your post, how much CC debt there is in the US.

$969BN per Fed. http://www.federalreserve.gov/releases/g19/Current/

My my.

[rick-l]

So I should max out all my credit cards so I can participate in the next bailout?

[craigster59]

Jeez, ya think? People have been filing BK due to CC debt for years. I thought when the BK laws were changed that was a clear sign we were headed south.

[legion]

Originally Posted by rick-l

So I should max out all my credit cards so I can participate in the next bailout?

I just paid mine off.

I also got a 30-year fixed mortgage.

I must be an idiot.

[craigster59]

Originally Posted by legion

I just paid mine off.

I also got a 30-year fixed mortgage.

I must be an idiot.

Friggin conformist.

[look 171]

I heard that on the radio this morning.

[Mr.Puff]

The real wage problem has been around forever. It has to do with a decline in union power.

[Z-man]

Originally Posted by legion

I just paid mine off.

I also got a 30-year fixed mortgage.

I must be an idiot.

I paid off my motrgage last year.

And I keep my CC speding to an amount that I can always pay off.

I must REALLY be an idiot. No bailout plan for me...

That said, here's my idea of a bailout plan that would work: Give the money to the folks who didn't get themselves in a pickle by over-spending in the first place! Those who are able to handle their finances will not be frivilous on spending, and we won't rack up a credit debt we can't handle. On the other hand, we will have the ability to infuse the economy with money by spending wisely, and investing wisely.

Who are you going to trust with the bailout? The government, or the people who did well despite the temptation to over-leverage?

-Z-man.

[126coupe]

I have had CC Cards since I was 18, in 32 years I have never had a Balance

[HardDrive]

We pay for everything with our card, and we pay it off every month. Alaska Airlines owes us a trip to Neptune at this point.




My 5 year old insisted we add some 'funny guys' to this post.

[competentone]

Originally Posted by legion

I just paid mine off.

I also got a 30-year fixed mortgage.

I must be an idiot.

[sarcasm] It's responsible people like you who are destroying the economy.

Why can't you be a good consumer and borrow and spend more?

Don't you know that the government is depending on you to start behaving irresponsibly? [/sarcasm]

[126coupe]

Originally Posted by HardDrive

We pay for everything with our card, and we pay it off every month. Alaska Airlines owes us a trip to Neptune at this point.




My 5 year old insisted we add some 'funny guys' to this post.

Agreed, AA Advantage here! Piling up miles big time, better use them before they go

[Hugh R]

United Airlines Visa, pay it off every month. Between that and my FF mileage I've taken my wife to the Bahamas, Prague, London (twice), and me, the wife and my two kids to Maui in three weeks. All those trips in the last five years.

If you shop at Vons, Pavillions, Alberstons, you can get United FF miles for your purchases, use your United Visa to pay the bill and get double miles. Pay it off every month!!

[Dantilla]

Originally Posted by HardDrive

My 5 year old insisted we add some 'funny guys' to this post.

My kind of 5 year old.

[pwd72s]

Originally Posted by legion

I just paid mine off.

I also got a 30-year fixed mortgage.

I must be an idiot.

Naw, you're a "deadbeat"...the term Credit Card workers use to describe people who pay their bill in full every month.

[Mr.Puff]

I'm a college student . Debt and me are like this .

[Bill Douglas]

Originally Posted by Hugh R

Pay it off every month!!

Yep, that's what I do. I used to work in the credit card division of a bank and the money they made was phenominal.

Actually, in a previous life, when I was do into some really dodgy real estate purchases I was even using the credit card to pay the mortgage.

[djmcmath]

Funny, it was just about a month ago, I started asking this question. When will the "credit crisis" reach the credit card companies? The oddity, of course, is that despite the obvious lack of credit, I'm still getting 3 letters a day from CC companies who want to loan me money. Funny.

Anyway, if the bombshell is going to hit in January '09, should I short the CC companies? AmEx? Discover? Who's going to be the Epic Fail in this one?

Dan