"The Credit Card Debt Crisis: The Next Economic Domino" LINK

[Blackhatjack]

This situation is primed to explode in weeks not months, and it is going to bring yet another immediate crisis which must be address by giving out more taxpayer money. Count on it.

http://www.huffingtonpost.com/arianna-huffington/the-credit-card-debt-cris_b_169657.html

"Hot on the heels of the banking crisis, the employment crisis, and the mortgage/foreclosure crisis, the country is on the verge of experiencing a credit card crisis.

According to the Federal Reserve, the total outstanding credit card debt carried by Americans reached a record $951 billion in 2008 -- a number that will only climb higher as more and more people reach for the plastic to make ends meet. What's more, roughly a third of that is debt held by risky borrowers with low credit ratings.

Credit card defaults are on the rise and are expected to hit 10 percent this year. This will obviously drive many banks closer to failing their stress tests -- but it will have an even greater impact on the lives of people who find themselves sinking deeper and deeper into debt.

It's a particularly vicious economic circle: every day, Americans, faced with layoffs and tough economic times, are forced to use their credit cards to pay for essentials like food, housing, and medical care -- the costs of which continue to escalate. But as their debt rises, they find it harder to keep up with their payments. When they don't, banks, trying to offset losses in other areas, then turn around and hike interest rates and impose all manner of fees and penalties... all of which makes it even less likely consumers will be able to pay off their mounting debts.

And that's not the end of the economic downward spiral. As more and more Americans default on their credit card debt, banks will find themselves faced with a sickening instant replay of the toxic securities meltdown from the mortgage crisis. In another example of Wall Street "creativity," credit card debt is routinely bundled together into "credit-card receivables" and sold to investors -- often pension funds and hedge funds. Securities backed by credit card debt is a $365 billion market. This market motivated credit card companies to offer cards to risky borrowers and to allow greater and greater amounts of debt."

MORE

[Blackhatjack]

1. IF they got taxpayer $$ they should not be allowed to spend it on lobbyists to oppose regulation

[GoesTo11]

2. How about the send out more pre-approved applications

and blank checks you can use to roll your balance from one card to another at 0% interest for 6 months?

That should fix it!

[leftstreet]

3. Guess they'll have to 'nationalize' our credit debt

Temporarily of course.

Scrub it of the badness and toxicity.

Then return it to the original holders.



Just like they're doing with the banks! WOOT!

:bounce:

[Blackhatjack]

4. I always thought 10% was a good return on money --maybe limit everybody to that as a ceiling

Tell them as long as they have taxpayer money they have to roll back everybody to 10% interest rate.

That would be an immediate shot in the arm for those struggling under these insane interest rates above 20%.

[Blackhatjack]

5. Years ago a smart industry insider said ... they won't stop lending if interest rates are capped...

They can make money at a 10% interest rate.

[Oldtimeralso]

6. Hell Capital One Just Raised My Rate By 11+%

Never late, never over-limit now OVERCHARGED!

[Blackhatjack]

7. Yep I got the same notices last week ... (but I got 'em over a barrel)

I paid the card down to zero, and transferred a balance to it at 1.99% interest which I can pay off with minimum payments as long as it lasts.

Of course I have to be careful that they do not claim we paid late and raise it to 29.99%.