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 ...
I have noticed alot of illegals using their credit cards to buy beer and groceries. I have a feeling many of these cards are not going to be repaid.
You posted: You know what though, life happens. Not everyone uses their cc’s for material goods— some use them for medical bills, growing a business etc...
Besides, 32% interest (the “maximum allowable by law”) is usury.
***
That rate isn’t usury in all states. In any event, the point is that if you use credit be prepared to pay it back. The only reason rates are this high is because of the credit history of the card holder. No one forces anyone to take these cards, or to use them. Consumers have a duty to understand what they are getting themselves into.
Not really. CC really are awful. My wife had 750 credit score with about 10% utilization. She got 2.99% BT for life offer on her AmEx and put about 85% utilization (paid off her 6% auto loan) with a FICO score still at 730. 10 year history, no negatives whatsoever. Chase rate jacked a card she had at 8.99 with about a $2500 balance to 29.99 because “another card was near its limit.” That card was paid off in 2 months and immediately went back down to the normal rate even though 98% of the BT was still there. I haven’t touched that Chase card since and it’s been over a year. I hate CC companies and after I’m done paying ours off completely by March, they’ll be locked away for good. I’ll use them every once in a awhile to buy gas so our FICO stays high but that’s it.
Oh and I forgot to note that even with 85% utilization on her AmEX card her overall utilization was still under 30% and was the only card over 30%.
Not always.
Some credit card issuers will increase rates simply because market conditions change (like now, with the mounting sub-prime mortgage losses).
Just do a case study on Redstone Federal CU in Huntsville AL and see what you find.
Limited membership - in theory, but it is so ridiculous in its application it is a farce. Membership is effectively wide open. I live in Alabama, so I can’t be a member of a CU in Oregon . . . man, that really cramps my style.
“Organizations do not pay taxes. Individuals pay taxes.”
My bank pays their taxes for them and charges them higher fees and rates to pay the taxes. When a customer compares a CU’s effectively subsidized rates to ours, it is a no brainer to them. FAce the facts, CU’s don’t have to price to cover a 35% income tax at the bank level. If you don’t think it has a major impact on the cost of providing services to your customer you are either igonorant of pricing models or delusional.
I am not advocating a socialist solution. Credit unions are the ones receiving the benefit of a government subsidy in the form a tax exemption. All I am asking for is equal tax treatment to business models that are essentially the same.
“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.”
And it is the tax exemption that permits that to happen, to the detriment of the banking system that is the backbone of the American economy. You are obviously clueless and/ or brainwashed.
That's an example. But what about the college student who lives in one state and attends school in another?
Different folks have different needs.
All I am asking for is equal tax treatment to business models that are essentially the same.
There are two ways to provide equal tax treatment: by taxing them all or by not taxing any of them. I prefer the latter.
Raising taxes is not the answer. Lowering taxes and equalizing regulation is the answer. The ultimate impact of tax increases is on the customer (bank) or the member (credit union).
You are obviously clueless and/ or brainwashed.
Nope.
But I do know that when my dad needed an auto loan, he was refused by the bank. It was the credit union that made it possible for him to buy a car. That is when we switched, and my family started out with small, community banks.
When the banks tripled his credit card interest rates (because they could), it was the credit union who stepped in with a lower interest rate.
You need to differentiate between the traditional credit unions with a true common bond field of membership and the quasi-banks running around masquerading as credit unions.
The latter are...the ones that make the rest of us look bad.
Export all jobs, import all goods, print more money! It’s a winning solution!
Make money off the credit vultures. Get a “cash back” card, and make sure you pay it off every month. They’re betting that you won’t. And if they nail you with a late charge, call them up and bitch about it. If they won’t waiver it, drop the card and find another one. Works for me.
I agree to the differentiation to the traditional CUs to the more aggressive. If you recall, I pointed that out.
Franchise limitations between states in no way justifies different tax treatment. There are lots of banks that don’t cross state lines.
My bank approves loans that other banks won’t make. The fact that a CU approved your father’s loan when a bank wouldn’t is virtually meaningless. Different institutions have different tolerence for accepting risk. Whether a bank or a CU is involved has absolutely nothing to do with the approval or disapproval of a loan.
My bank offers 2 credit card plans. One currently carries a 12.9% rate and the other a 9.9% rate. Granted, we are the exception rather than the rule, but not all banks rape their customers. We have carved out a loyal niche with fair pricing and we still make decent money. Our asset quality is pretty darn good, too. We do not stick it to Joe 6-pack like most banks.
These days, you pretty much have to have a card to buy gas. In my case, anyway. I can't be bothered to go inside and prepay cash.
Debit Card with Visa Logo covers me for that but yeah you are right about needing plastic for gas these days.
B of A's bill-paying application lets you schedule the day payment is made. That way, you can avoid actually paying until the date due.
Bought a car two years ago and paid it off in nine months.
I bought a car last month. There was a sign above the manager's desk saying that car purchases could not be charged. That was too bad, because I could have used another 28,000 points in my Membership Rewards account. On the other hand, I was paying a little below dealer invoice, and American Express would have eaten the dealer holdback for sure (the reason for the sign).
” you can avoid actually paying until the date due”
Why wuld anyone do that?
If by paying online it wouldn’t be paid until due date I would mail it to make sure it was paid.
BofA took over Mastercard and when you pay it it automaticly puts in the due date and I change it to the day after the statement date.
I was thinking the sam thing.
The author appeared to be really reaching. Payoffs had fallen from over 20% over the last many months, according to his article. Only now does a 0.1% drop suddenly become panic-worthy.
You're right - it's no way to live. Some will get good judgement by having bad judgement - the lucky ones. Others will repeat mistakes forever. Then again, if there's massive inflation, the borrowers will be the winners...
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