Credit card debt will blow up : Bad Credit Advisor

Credit card debt will blow up

There is no question the credit card debt will blow up, the only question is how soon and how bad. There is something close to $915 billions in U.S. credit card debt, most of which is held by Chase, Citigroup, American Express, Bank of America, Providian and Capital One. That is a staggering number, considering that roughly 300 million people live in US, the credit card debt per person is about $3,050 USD. If you don't count children, elderly, prison inmates, welfare bums, drug addicts, homeless, illegals and everyone else who don't have credit cards, than this number is probably closer to $9,000. The sweet habit of using home equity as never-ending ATM is no longer an option.

Meanwhile, the quarterly delinquency rate for Capital One, Washington Mutual, Citigroup, J.P. Morgan Chase, and Bank of America rose an average of 13% in the third quarter, compared with a 2% drop in the previous quarter. Citigroup, reporting a 57% decline in earnings, cited higher consumer credit costs and said it would put aside $2.24 billion in loan-loss reserves to cover future defaults. American Express would boost its loss reserves in its core U.S. card unit by 44%. Capital One, Bank of America, and Washington Mutual all said they are bracing for a 20% or higher increase in credit card losses over the near and medium term. Bank of America must feel good about swallowing MBNA in 2005 for some $35 billion. I don't really care for the banks and credit card issuers, but to the consumer and overall economy, the impact can be as severe if not more as the sub prime mortgage meltdown.

Thu Nov 8, 2007 11:11AM by Tony | More in Personal Finance | Comments (1)

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