Are Credit Cards The Next Collapse?

McClatchy:

First came trouble with mortgages, then home equity loans and commercial real estate. Now, banks are starting to worry about credit cards.

As the economy slows and unemployment rises, consumers are defaulting on credit-card payments more often. And though that trend is unlikely to create a crisis in line with the mortgage fallout, it's still a headache for banks that are already hurting.

Read the whole story: McClatchy

Comments

[nogimmicks]

Credit cards simply must be abolished and replaced by easy to use cash cards. Nobody should spend more than they can afford. Evil bankers push people into borrowing to charge penalties and interests.

[Carolab]

Of course the credit card collapse is next. No duh. Forbes reported on this last month.

Again, all planned out. People had no where to turn but to their cards, and of course the Bankruptcy bill was all part of the plan. That and the outrageous, usurious interest rates and double billings the credit card companies are sticking on everyone.

[Oregon Ivy]

Well, since all those banks like Captial One got a big huge chunk of my taxpayer dollars, I think I'll write : PAID IN FULL, UNCLE SAMMY on my next bill and send it in.

[000Jade000]

Ever since the crap hit the fan on Wall Street, I've been getting a lot more credit card offers in the mail. Washington Mutual has sent me 3 applications (they never sent anything to me before the market crisis), Bank of America in conjunction with Sallie Mae has sent offers, Chase, and a few other banks. Had to laugh as I ripped up the applications and threw them out.

[Graywolf48]

Interesting, but I've noticed just the opposite. Before the "crisis" my box was stuffed daily with "Pre-approved" credit card offers for Visa, Master Card and even Discover. Since the bailout, I get very few (if any) "Pre-approved" credit card solicitations. Once in a while I'll get something from Washington Mutual. Since I already hold their card, I don't know why they keep soliciting me for another. Otherwise, the only mail I get lately (other than the requisite bills) are obnoxious RNC campaign mailers that go unread straight to the trash can.

[sherrzinpa]

I've gotten way less offers too, I used to get them on a daily basis. I had to laugh because at least 6 months ago I was getting something from AmEx on a daily basis. I was actually surprised at that one, even though my credit is pretty good, because I thought you had to have a certain yearly income to get an AmEx.

[PacificGatePost]

More abuse of the taxpayer is coming.

Congress didn't do its job, ... again.

http://pacificgatepost.blogspot.com/2008/10/what-they-didnt-tell-us-about-bailout.html

[stavros]

Let the cards fall where they may.

[GirlsRule]

"W" greatest achievement was convincing American's to SHOP! And shop we did...We'll be paying for that failed leadership for a looooong time.

[DirkdenHartogForObama]

Actually Americans are as stupid as Bush for going into debt over their heads.

[IndependentMeans]

This is exactly why I am livid with the new bankruptcy bill, bought and paid for by the Banks. Have you tried to see if you qualify for a BK? You have to be homeless without more than a nominal income. They really have screwed us over.

[FogBelter]

If we were talking about 1 trillion dollars in consumer credit card debt, maybe the footprint of risk doesn't look as menacing as what has happened with Mortgages ... however, I believe that this credit card debt has been securitized, leveraged and reinvested in the market as CDOs to the mortgages, CMOs ... that would mean a mere trillion dollars in credit card debt would have a vastly greater impact to the credit market in its securitized form, should it start to collapse.

Just a thought.

[Harry Scrote]

Yes.

[larry278]

Banks are now in a position to be stuck with theme songs such as "I'm Forever Blowing Bubbless" or "I'm Always Chasing Rainbows" since all, or very few, of their risky loans will ever be repaid. The banks will be fortunate to get 5 cents on every $500.00. The financial/banking system or structures are broken into piles of dust. The wind is blowing the dust away. There is a possibility that Sen McCain & ReThugLieCons who are running for office know that. The party which gets the White House & the 111th Congress will get these problems,
Why would any one want office? When you hold an office, you will be blamed for not making the USA a financial power.

[aege8th]

Oh the poor poor credit card companies! Feeling sorry for them would be like feeling sorry for a loan shark because when his client couldn't pay him on time, he broke the guy's kneecaps and now he can't work, which means now he REALLY can't pay him back.

Credit card companies are the most predatory of predatory lenders. Some of them charge as much as 22% I believe thus $1000 in charges ends up costing the borrower $5000, mainly because the ccco's are charging interest on the interest! So if JoetheBlough defaults on his credit cards, well, he's probably ALREADY paid off his original purchases, but maybe only 50% of the outrageous, usurious interest.

[MCTSilverlakeCA]

Actually it's closer to 30%... if you fail to pay them ..and they tack on additional charges of all kinds... it's pure USURY --- and that's illegal, but they don't care, because up until the Crash, they wrote all the rules and Bush just signed them into law.. he had too, Big Business put him where he is ..

[thegoreyears]

I don't feel sorry for them and they better not ask for taxpayer money. Consumers are probably more willing to default than they would be if the banking institutions running credit card scams treated their customers better and didn't take every opportunity possible to charge usurious rates.

[SeanGardner]

I agree. Even more reason that this industry needs to be regulated.

[monicaangela]

The tears are only a way for the banks to get their greedy little hands on more taxpayer money. I stopped using credit years ago in protest to the absolute highway robbery in the credit card markets. My philosophy is, if you can't pay cash for it, you don't need it. Try using a debit card, you get the same sensation without the paperwork, user fees, extra charges , etc., etc., etc., why make the wealthy wealthier, live within your means.

[IndependentMeans]

Agree, regulate.

[heal57]

When I was much younger [a long time ago] 12% was 'usury' and illegal. It should be the same way now! All the crooked politicians we elect do the bidding of the banks. They even changed the bankruptcy laws to benefit the banks.

[pugzbarbq]

write your senator and congressional rep to regulate and enforce a 10% cap on credit card interest!