Credit Card Delinquency Hits Record High - AP

[hatrack]

WASHINGTON (AP) -- "The percentage of credit card payments that were past due shot up to a new record in the final quarter of last year, but delinquency rates for some other types of consumer loans dropped, painting a mixed picture of how Americans are handling their debt.

The seasonally adjusted percentage of credit card accounts 30 or more days past due rose to 4.43 percent in the fourth quarter of 2003, the American Bankers Association reported in a quarterly survey released Tuesday. That surpassed the previous all-time quarterly high of 4.09 percent set in the third quarter of last year.

James Chessen, the association's chief economist, said that credit cards often are used as a "financial bridge" by those who lose their jobs. He said that credit card delinquencies have been at high levels even as the economy has turned around because job growth has been so slow.

"Clearly the improving economy has not yet touched all individuals, particularly those who continue to look for work and may be relying on credit cards to meet their daily living expenses," Chessen said. "The financial strain is increasing as the time between jobs continues to lengthen," he said."

EDIT

[Jackpine Radical]

1. Can mortgage defaults be far behind?

Think of all the banks that could suddenly find themselves unwillingly in the real estate business when thousands of homeowners lose their jobs and default on all those new mortgages & cash-out refinances. That could creatge a credit/banking crisis the likes of which haven't been seen since 1932.

[NNN0LHI]

4. Mortgage defaults are at an all-time high nationwide - April 19, 2003

http://cgi.citizen-times.com/cgi-bin/story/wncbusiness/33255

<snip>Mortgage defaults are at an all-time high nationwide, Moore said. Americans got used to overtime, rising house values and easy access to credit during the boom of the 1990s, only to see much of this vanish in the economic downturn of the past few years.

more

http://www.timesofmoney.com/home_loan/jsp/EtContentDetails.jsp?EtContentName=%2FWebServerCache%2FContent%2FCategory4%2F-1545562971.html

Home loan defaults at record high in Q3

A record level of US mortgage holders lost their homes to foreclosure in Q3 '02, but mortgage rates near 37-year lows will remain irresistible to home buyers, keeping the housing boom humming through '03, separate reports said on Tuesday.

US home loans in foreclosure edged up to a new high in Q3 last year as job losses due to a weak economy squeezed more mortgage holders out of their homes, the Mortgage Bankers Association of America said on Tuesday.

However, the group said a slowdown in late loan payments means foreclosures will decline, with more people finding and keeping jobs as business activity picks up.

At the same time, mortgage interest rates at lows not seen since 1965 mean home sales and building will sustain the heated pace that has made housing the lone bright spot in the sluggish US economy, mortgage finance giant Freddie Mac said on Tuesday.

more

[Catfight]

2. the bubble will burst

unless it's slowly deflated with a NEW leader with NEW ideas and this great country can start healing from the incompetent doctrine of this illegitimate president.

[Yavin4]

3. America's New Social Safety Net: The Credit Card

Scary but true. When times get hard, Americans use their credit cards to get them through.

[oneighty]

5. at the local grocery store

I have watched some shoppers buying small amounts of food stuffs with credit cards. That is not good. I think.

180

[twilight]

6. I never buy food with a credit card - never

I guess its the old school way of viewing things, but my late father was appalled to see people buying FOOD with credit cards. I feel the same way. If you cannot afford to buy food, you have serious financial problems IMO for what it is worth.

I recently paid off all credit card debts. Who needs them?

:dem: :kick:

[DBoon]

8. Now now....

Credit cards can make these expenses easier to track and to manage. Credit cards are accepted more readily than paper checks and are more portable.

We buy all our groceries by credit card. The bill is paid in full every month. We don't "borrow" anything except for the 30-day float.

Don't assume everyone who uses a credit card is heavily in debt.

[cherylmarie]

10. Cash-back bonuses too....

Many people pay off their balance each month and never pay any interest on their cards. Our card give us back 1% (usually $10-20 per month) which we can use to buy gift cards for double the value.
If you can't pay the balance each month, it isn't worth it!

[BR_Parkway]

15. I have a friend who pays everything on a credit card

then writes one check to pay it all off each month. No interest and he gets the 1% kickback, so in this case, he's actually using this to manage his money better.

[DBoon]

7. Recent bankruptcy "reform" legislation

Makes it harder to declare bankruptcy and get out from under these debts, in the event of a job loss. Sponsored by the banking industry, of course:

http://www.opensecrets.org/alerts/v5/alertv5_16.asp

Also note the Salon article:

Thanks to assiduous efforts by credit card companies and banks, the House rushed through a bill on March 1, with scant media attention, that would make it radically more difficult for middle-class consumers to escape overwhelming consumer debt and make it a lot more likely that families will lose their homes and cars. The Senate is preparing for a rapid vote on the same measure.

http://dir.salon.com/politics/feature/2001/03/12/bankruptcy/index.html

[Sanity]

12. Which is supported by Daschle and many Senate Dems

Fucking idiots

[phantom power]

9. my proposal

One of two options:

1) Outlaw credit-cards. Now that we have ATM cards, there's no real reason to use a credit-card for convenience.

2) Allow credit cards, but make the application process far more rigorous. More like applying for a mortage, where you have to produce a bunch of documentation that shows your net worth and latest pay stubs, etc.

[DBoon]

11. You will need better fraud protection with ATM cards

to make this work.

Why I NEVER use ATM cards:

- with credit cards, you are only liable for the first $50 if your card or card number is stolen.

- With credit cards, there is a dispute mechanism for goods ordered but not delivered, incorrect charges, etc. It is fairly consumer friendly. I would not order on-line or by catalog if I didn't have this easy out.

With credit cards, the merchant must have an account with the processor. Dishonest or crooked merchants can have this account revoked by the processor. To accept ATM card transfers, the merchant only needs a checking account. Banks have much less control over these than the credit card companies have over merchant accounts.

[phantom power]

14. those are important

I would want the same protections for an ATM. For that matter, I'd like those same protections regardless.

Or, maybe option (2) is the way to go. The main goal (imo) is to limit the amount of revolving/hi-interest credit to some amount that each person can reasonably pay down. For any particular yearly income, there is a certain amount that can reasonably be applied to paying down credit cards. It seems clear that many people are way over this limit, and there's no reason I can think of for not changing the current credit-rating formulas so that fewer people end up crippled with debt.

[74dodgedart]

13. We are witnessing the death throws of a consumption based society

Trillions in public and private debt. Consumption of more than our share of natural resources.It can't go on forever.

[phantom power]

16. anybody else notice

the recent increases in the number of

"payday loan" stores
"we buy ugly houses for fast cash" ads
"cash for auto title" ads
bankruptcy attorney ads