Skip to comments.Credit card defaults keep rising, report says
Posted on 08/28/2007 6:58:28 AM PDT by HydroshockEdited on 08/28/2007 7:18:41 AM PDT by Admin Moderator. [history]
NEW YORK (CNNMoney.com) -- American consumers are defaulting on their credit cards at a sharply higher rate compared to last year, in what could be another consequence of the recent subprime mortgage market crisis, according to a report published Tuesday.
In addition, late payments are also up, cardholders are showing signs they are less willing to pay and credit card companies have written off 30 percent more payments during the first half of this year versus a year ago, the Financial Times reported.
The credit rating agency Moody's told the paper the problem could be due to the property market slowdown and fewer homeowners opting not to refinance their residences.
"The combination of higher interest rates and a softer real estate market diminished the attractiveness of mortgage refinancings in which many borrowers reduced their more expensive credit card debt by drawing on the equity in their home," Moody's told the paper.
I’m paying mine off with as big a payment each month that I can afford. Unexpected bills made me take the card back out of the safe, but it’s been returned, and now I’m clearing the red ink.
Credit card defaults are up because credit card issuing banks are giving them out like candy canes at Christmas, to people who have no financial substance. My mailbox is full to overflowing with CC offers from banks in places I’ve never been, like South Dakota and Michigan..........
The credit card industry has allowed for major losses in the fees/interest they charge. Their entire marketing campaign has been to THROW credit at anyone and hope that a percentage would pay back. They target college campuses and young people they know do not have the sense to not play with something they cannot afford to pay off....it is all about playing the odds. After all, where else can any organization, bank or otherwise, make 20% per year on their money reliably??? The risk is worth it.
I suspect this is also true about the subprime mortgage market. I have not seen any discussion of how the fee structure for such mortgages was set up or what default rate the lenders originally expected.
Just means that the rest of the credit card suckers will have to pay more to bail out the companies.
Oh, too bad. Take the losses and learn something.
Banks locate to states where they can charge higher interest rates.
We pay our CC in full every month and only use one. We live within our means and don’t go overboard at Christmas and other holidays. It’s not difficult to do. We don’t play “Keep up with the Joneses” and do whatever we can to keep our cost of living down. My 20 year old daughter, on the other hand, is well on her way to bankruptcy..............
Go to junkbusters.com and check out the resources there. They provide you with printable form letters you can send to the credit bureaus, to tell them not to release your credit information "for promotional purposes", i.e., these solicitation letters that are just trolling for suckers. They can still answer legitimate inquiries about you, but at least the junk mail will settle down.
NOt if you pay off your bill every month like my wife and I. Besides I like getting free airline tickets.
In a thread on credit cards a while back I mentioned not buying anything you couldn’t afford. I thought I had started a riot. Several people took violent exception to that. Apparently there are some things you are supposed to buy by credit card even if you can’t pay for them. I guess I just don’t understand. I’ll bet the credit card companies do though.
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