US credit card delinquencies at record highs -Fitch

[UpInArms]

Source: Reuters

NEW YORK, Feb 4 (Reuters) - Delinquencies on U.S. credit cards rose to record highs in January as the economic recession weakened consumers' finances, Fitch Ratings said on Wednesday.

Payments at least 60 days late measured by a Fitch index rose 0.47 percentage point to 3.75 percent last month, after accelerating in the fourth quarter, Fitch said in a statement. The previous record was 3.73 percent in February 1997.

"U.S. consumers continue to struggle in the face of mounting pressures on multiple fronts, from employment to housing to net worth," Michael Dean, a managing director at Fitch, said in the statement.

<snip>

But rising delinquencies and charge-offs by credit card companies will hurt performance of asset-backed securities (ABS) supported by credit card receivables, Fitch said. But downgrades are seen limited in the near-term, it added.

Total charge-offs on prime, general purpose credit cards from the December collection period rose 0.66 percentage point to 7.5 percent, up 40 percent from a year earlier and the highest since bankruptcy reforms caused a spike in 2005, according to another Fitch index.

Read more: http://www.reuters.com/article/bondsNews/idUSN0428871920090204

[dave29]

1. note to self: pat self on back for paying off all credit debt last year

whew

I know it's impossible for some, and we'll most likely have to use cards if we lose our jobs -- but for now I am just so thankful that our credit debt is gone. Of course we have next to nothing otherwise -- so there is that :(

[Yavapai]

2. Do you know what the credit card companies call those who pay off the balance each month?

Deadbeats!

Saw that in a documentary a couple years ago...

[pipi_k]

4. I'm a deadbeat!!!!

I pay my cc off every month too.

Sometimes I even send a payment that's a few cents OVER whatever the monthly balance is.

They're probably pissed as hell that they can't charge me all kinds of interest and processing fees.

Maybe once a year I should carry a small balance just so they don't think I'm a total scumbag...

[Yavapai]

5. Great idea!

Maybe I could include an old Mexican Peso, that might keep a couple of people employed to figure out what to do with it...

[Skink]

12. These guys hit retailers hard with fees also so they are still making money of your CC use.

[defendandprotect]

15. And no matter how many times you've paid it off by the month... they KNOW . . .

one day you'll get hit with something unexpected and they'll have a good

chance of snagging you. They're just waitin' . . .

[radfringe]

3. and the higher the greedy bastards raise the rates

the more deinquencies there will be.

[FarCenter]

6. Pay your credit cards off or you will subsidize the real deadbeats

Total charge-offs on prime, general purpose credit cards from the December collection period rose 0.66 percentage point to 7.5 percent

What that means, in plain language, is that if a credit card company charges you 27.5% interest on your outstanding balance, 7.5% is going to subsidize the people who are getting their balances written off, the real deadbeats. Actually, part of the 20% also goes for collection attempts, legal processes, etc. on the deadbeat accounts.

Carrying a balance on a credit card is almost like being in debt to the Mafia -- you don't want to do it.

[AnneD]

8. They do everything in their power.....

to inflate your balance. They cut your limit to below what you carry then charge you a fee for being over the limit and if they really cut it so that they can keep you from paying it off any time soon. They increase your interest for what ever reason they can cook up. Just remember, not all that amount they wrote off was legitimate debt-a large portion is their fees.

[cascadiance]

14. Yeah, AMEX has been playing that game with me lately...

I'm telling them that the only reason I'm keeping this card is because Costco doesn't take others.

A word of advice if you have multiple credit cards that have debt on them. If you're paying them down, and want to retain available credit for emergencies, don't necessarily prioritize the highest interest rate card to pay down first. Make sure you have available credit on your other cards before you do that, because the ones that are dinging you for the highest credit rates, are also likely to shrink your available credit to just above your balance as soon as you pay a big chunk of it off. If you pay all of your debts on this card and don't have credit on any of the others, then you'll find yourself potentially in a tight spot if you have other new expenses. Have at least one card that you rely on with a decent amount of credit available on it first, and then attack the card with the highest interest rate. That way, if they drop your credit limit, you still have a place to get credit if emergencies come up. If you take advantage of one of those 0% fee checks on a card, use the card for that and don't use it for anything else and have a timed bill pay on it so there's no possibility of them dinging you at all for fees or throwing out your 0% interest rate. Pay it down to nothing first before you cash one of these checks to make sure you don't have any residual credit that you're still carrying that will stay with you until your card is completely paid off (you pay down your 0% balance first usually). Also double-check the one time fee for cashing those checks and compare it to the interest you'd normally pay for a given period to see if you're getting a good deal.

I had to deal with this when paying a lot of moving expenses and still waiting for older landlord to pay me back my deposit and some other expenses I incurred on the older house right before I left. AMEX tried to pin me in that corner (and do the old extra fees for exceeding credit limit, etc.).

[Veilex]

7. The interesting thing here is that

credit card companies over the last 6 months have been dramatically raising rates all over the place in WA state.
There are individuals here who have been in excellent standing with an 8% interest rate one month, and then next month their rates are 25% or higher... the reasons cited? Business decision. Watch your CCs like a hawk if you have one... Allot of these companies are on the hunt for people to screw.

[FarCenter]

10. An 8% rate is a teaser rate

Typically that is an introductory rate for a new card. With the tightening of credit, there is less competition between issuers for new customers. Look for all the cards with rates below 18% to reset to 18 or above in the coming months.

People who have been using credit cards with introductory rates to carry a balance which they roll from one card to the next will soon find out that they can't do it anymore. At that point, you have to be able to pay off the balance, or you are shafted with a rate in the high 20%s.

[Joanne98]

9. Jubilee

[doodadem]

11. Call me a deadbeat then

We caught Citibank consistently holding our monthly payment to credit it until past the due date, then coming back and charging a late fee. I refused to pay the late fee. Wrote them, called them, emailed them. They then used this as an excuse to jack the rate from 12% to almost 30%. In no time, my little bitty balance went over the limit, even though I had stopped using the card. So then, they started tacking on extra fees for that too.

No one wanted to listen. I finally said, screw this, and just stopped paying them. Hope they go under.

[MadMaddie]

13. They have done it to themselves I have no sympathy for any

of those companies.

[defendandprotect]

16. This is going to mean more bankruptcies, isn't it --- ????

[sarcasmo]

17. Yes, and it will be nasty. When everyones unemployment runs out that is when the real fun starts.

[defendandprotect]

23. They've made it hugely costly now --- my friend paid $2,000 but I've not

found out yet if that's anywhere near an average range or whether she was

taken advantage of? She had to do it quickly -- no time to check around and

someone she worked with recommended this particular group of lawyers.

Meanwhile, how does someone unemployed for any length of time handle costs of

bankuptcy????

Where needed, it should be a matter of legal assistance to those unemployed.

[prolesunited]

18. Pay your credit card bills online

at their sites. That way the check can't get "lost" in the mail and you can pick what day it gets credited to avoid any late fees or hikes. Most will credit is the exact same day, but a few will need of few days lead time. Also, you can set a date well in advance so you don't accidentally forget it.

I use an index card for my monthly bills (archaic, I know) and write down what I owe, due date and when and what I paid and can review it at a quick glance. We have less than $1,000 in CC debt (medical bills and car repairs), but I'm trying to conserve cash flow right now, so I'm taking my time in paying it off.

If you screw up once and pay late, call them and ask for a break. If you have a history of paying on time, they might let you slide.

[Blue_Tires]

19. that's what they want

crushing debt, and a populace too worried about fighting off bill collectors to actually speak out...

[SOS]

20. Visa profits up 35%

By ratejacking, merchant abuse, outrageous fees and other sleazy practices, the loan sharks are really cashing in:

Visa profits up 35-percent
By AP February 4, 2009
BOSTON – Visa Inc. said Wednesday its first-quarter profit rose by 35 per cent as the shift from cash toward electronic payments maintained its staying power, even while consumers tightened spending amid the recession.
The results beat Wall Street expectations, and shares of Visa rose nearly eight per cent after the regular trading session.

http://centrepointnews.com/?p=1388

[Dreamer Tatum]

21. You realize that Visa doesn't lend money, right?

You know that they make money off of the issuers, right?

You know that no one with a Visa card ever sends any money directly to Visa, yes?

[SOS]

22. Yes

I was speaking as a merchant who accepts credit cards and is being ripped off every month by their insane fees.

[defendandprotect]

24. THIS is exactly the way that capitalism kills itself --- and why we should NEVER bail them out - !!!