Credit cards to 'implode:' analyst

[RedEarth]

A hurricane of bad credit card debt will start crashing ashore in the United States in the first quarter of next year, even as the mortgage crisis continues, analysts at New York research firm Innovest Strategic Value Advisors warned Monday.

“A combination of a 10-year steady drip of deteriorating personal finances and a tidal wave . . . brought on by the mortgage and credit crisis leads us to believe that credit cards are going to implode in the near term,” Gregory Larkin, Innovest's senior banking analysts said during an online seminar on the topic.

“If history is any indicator, there should be an equivalent surge in credit-card charge-offs very soon,” he said. “We forecast first quarter credit-card charge-offs will be $18.6-billion (U.S.) and that the total 2009 charge-off bill will add up to $96-billion.”

http://www.theglobeandmail.com/servlet/story/RTGAM.20080929.wcreditcards0929/BNStory/Front

[soothsayer]

1. Feh, so we have at least until next year to get a decent bill.

[billyoc]

2. I plan to do my part by not paying shit.

Don't thank me, I get my thanks from helping others.

[Joanne98]

3. Because they keep raising interest rates. Now they won't get paid at all!

[lurky]

4. 96 billion? Whatever...

That ain't nothin' anymore. We've got much bigger problems in the meantime.

[RedEarth]

8. CC are just one of the myriad of problems banks are facing

Auto loans are another...when you start combining them all together then you can start having problems. We also have commerical real estate loans that will start coming into play.

[8 track mind]

9. this is why

i buy cheap used vehicles. Super easy to pay off.

[struggle4progress]

16. Comparable to the "value" of troubled mortgages. The industry will want another $700 billion to bail

out the credit card industry

[DJ13]

5. If they raise rates to 30% but cause 20% delinquencies

.....wouldnt a smarter move be to lower interest rates down (even to near 0) if it keeps the consumer paying on their account?

[Warpy]

6. Anybody who doesn't see that coming

has been waddling around with his head up his ass since the 70s.

If you want to know where depressions come from, follow the debt.

When people are forced into debt to compensate for falling wages, that's when you're going to get a depression. They soon reach the limit of debt they're able to service and still eat and stop buying.

Only by extending credit that was so easy that they were using it to eat did they allow the system to hang on as long as it has. Now the crash is coming and it will be a deep one.

We might avert disaster with a flexible Democratic administration and Congress bereft of crybabies. We won't if the GOP cheats its way back in.

[bluestateguy]

7. I paid off all my bills

I wash my hands of it.

[MISSDem]

10. I don't feel sorry for people with a mountain of credit card debt.

IMHO, people are living beyond their means. I use a credit card but pay it off in full every month. And, if you use a credit card you should have money set aside somewhere that you can use to pay it off if you should get into financial problems; otherwise no credit cards. I learned the hard way by using credit cards and carrying a balance. One day my husband at the time lost his job unexpectedly and I got behind. Never again.

[Faygo Kid]

13. Then regulate the damned things. Disclosure. Bar bait-and-switch.

End the practice of paying one bill one day late causing all credit cards to jump to 30%.

The list of consumer ripoffs is huge, and you can add that bankruptcy monstrosity of a few years ago to it. Check out Carl Levin's bill.

I'm in the same situation as you are, but a hell of a lot less smug about it.

[sui generis]

14. so, it was okay for you to "get behind", but nobody else?

the fact of the matter is, and the tough love lesson here for our economy is it is 100% the responsibility of the person who lends the credit. If they are lending beyond your means to repay then THEY are at fault.

Remember, those people are the "professionals", and they consider people like you and I sheep, to be fleeced and then turned into dogmeat when we're no longer useful to them.

[MISSDem]

15. No it was not "okay for me to get behind but nobody else". I just

was giving myself as an example. I did finally pay off all of my bill which is what everyone should have to do. And why is it the loaners responsibility if you apply for a credit card and are approved for, say $5000.00 credit,have the documents to show you can pay it back but then you do not do so. That just doesn't make sense.

[yurbud]

11. a fix: turn off interest and force companies to take whatever people will give

[Waiting For Everyman]

12. We need to write down these terms by law, across-the-board, or

none of these debts will get paid. It's called IMPOSSIBLE. At some point reality has to matter, or it's just a group delusion.

Doing it by law is the only practical way to make it fair, and get enough done. Mortgages, credit cards, student loans, the whole personal finance shebang. What industry wants to do, is up to them.

This whole credit mess needs re-negotiating to include the debtors for a change. The laws and terms have been far too one-sided for far too long. These predatory loans simply can't be paid the way it is.