Posted on 08/23/2007 1:39:01 PM PDT by Hydroshock
NEW YORK (CNNMoney.com) -- Fallout from the mortgage mess and lower home prices may have started to creep into the credit card arena, judging from July payments and some initial moves by issuers to tighten the screws on cardholders.
After falling for three consecutive months, delinquent payments on credit cards -- defined as more than 30 days late - increased slightly in July, to 4.64 percent from 4.62 percent in June, according to CardWeb.com. A year ago, the delinquency rate was 4.18 percent.
The amount of credit card debt consumers are paying off, meanwhile, has fallen. The portion of outstanding balances paid in July slipped to 18.3 percent from 18.4 percent a month earlier.
The repayment rate hit its peak (21 percent) in October 2006 after credit card companies began complying with regulators' mandate to boost minimum payments to cover interest, fees and some principal. For years, the default minimum was just 2 percent of your outstanding balance.
CardWeb.com CEO Robert McKinley suspects delinquencies may increase in the fourth quarter because of the credit crunch. Mortgages and home equity loans are harder to come by, home prices have fallen and more than 2 million subprime adjustable rate mortgages (ARMs) are beginning to reset to much higher rates
(Excerpt) Read more at money.cnn.com ...
“Credit card company interest rates need to be controlled. Hell....everything else is.”
Not health care expenses unfortunately. And, they need to be!
regards - red
There are huge swaths of business that CU’s are not allowed to participate in.
I’m not selling Dave Ramsey but ever since I listened to his show I have a different life. I do use a credit card to reserve rooms in hotels, cars etc and to make online purchases but I immediately pay the purchase price for the item.
I can’t imagine being in debt to a credit company save for my mortgage. I hear people say how they are going to cover one card payment with another. That is no way to live.
They are also exempt from the Community Reinvestment Act.
Membership is wide open now and there is no justification for the exemption other than the politics of the labor movement.
Wrong. Membership is still limited.
I can open an account at a community bank in Oregon or Alabama, even though I reside in Virginia, but I can not acquire membership at a local credit union in either of those two states.
If they are going to be free to conduct full blown banking business, they should not be subsidized by the tax exemption because it gives them a competitive advantage over other financial institutions.
Organizations do not pay taxes. Individuals pay taxes.
Bank customers pay taxes on interest income that the commercial bank has already paid taxes on.
Plus...let's not forget the Community Reinvestment Act, in which the government forces banks to give money to poor people.
The answer is never more taxes and more regulation. Frankly, I'm surprised to see a FReeper like you advocating such a Socialist "solution"...do you work for a bank, by any chance?
Credit unions are a good thing! They almost always have fewer fees, lower interest rates on loans and higher interest rates on deposits. Credit unions have members, not customers.
Truth in Commenting Disclosure:
+I work for a large military credit union.
I have never heard of a credit union that practices universal default.
Don’t have any credit cards. If I don’t have the cash, I don’t buy it.I'm hoping you see the contradiction in this post. So what is it: cash or credit?
Bought a car two years ago and paid it off in nine months.
You nailed there both the cause of the sub-prime freakout (resale market dried up) and why it won’t explode any further (overall presence of stable players).
This is all just another magnificent American recycling of dollars — at some one else’s expense.
Given the choice between paying the minimum on a maxed out credit card and the mortgage, the majority of folks will buy another month on the mortgage.
The long term effect will be unpleasant.
They tried that with me too. I told them where they could stick their rate increase. I can’t use their card anymore, but I’m paying off the current balance at the old rate. Just as well, I needed a boot in the butt to break me of some old bad habits anyway.
I’m not seeing any more disasters. Still, I appreciate your apprehension.
Here’s the premise: this was a monetary more than a debt realignment, and as such the dirty deed has been done.
There’s virtually no change — measured in hundredths of a percent, and this is a story?
Every company should be required to give you at least 30 days from the time you receive your bill to pay it.
This silly 15-20 grace period from the day they CLAIM they mailed it to you is just another way for them to collect late fees and jack up your interest rate.
Yeah, I know there are anally retentive people who never go on vacation and pay their bills the day they receive them, but fortunately they are few and far between.
credit unions are less risky and hold more capital in reserve than most banks do. they have to publish this information inside the branch. my credit union has its assets only leveraged 5x, whereas some lenders are nearly at the legal maximum.
the credit union is a bit slower and we took our mortgage with them as rates were rising because they didn’t adjust theirs as high....if rates drop when we refinance we will likely go outside as the CU will take longer to drop them.
I agree: 32% APR is usurious, but it's not the "maximum allowable by law." National banks are governed by federal regulations and thus are exempt from state usury laws. In addition, the maximum interest rate allowable by law is that of the state in which the issuing bank is located.
Ever wonder why they are located in South Dakota (Citibank), Nevada (WaMu/Providian), Arizona (the original Bank of America), Delaware (MBNA-Bank of America, Discover, and Chase)?
Some credit cards now have default rates of 40+% APR.
“I know there are anally retentive people who never go on vacation and pay their bills the day they receive them”
I get all my bills online and pay every one of them online the day that the statement is available. I go on vacation but I take my latop and do exactly the same.
We did just that after Capital One informed us the interest rate on our card would go from 6% to 15%. The credit union is 9%, but we usually don't carry a balance any way. Just got ticked off at the quantum jump by Capital One.
!!!!
How about more like "loan-sharking"?
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