Monday, December 24, 2007

Credit Card Defaults Soaring


In another sign of how thorughly hosed the American economy is, we have this story today from San Francisco.

SAN FRANCISCO - Americans are falling behind on their credit card payments at an alarming rate, sending delinquencies and defaults surging by double-digit percentages in the last year and prompting warnings of worse to come.

An Associated Press analysis of financial data from the country’s largest card issuers also found that the greatest rise was among accounts more than 90 days in arrears.
As the story goes on to say, this development is another signal of the fraility of the American economy. One thing that is most unfortunate is the fact that alot of families in the era of Bush's robust economy have to use their credit cards simply to survive. Then along comes their monthly bill or bills and they cannot make the payments.

Much of the blame for this debacle rests with the credit card companies who constantly flood your mailbox with offers for credit cards; some companies specialize in giving credit cards to people with poor credit histories - like me! All of my foreign travel in the last 14 years had to be financed somehow and I did it on the cards egarly provided by any number of banks. How else could I have purchased airfare, paid for hotels and rental cars and hung out for a week or so? In 2005 I made five trips to Europe and the Middle East on top of a couple jaunts to the Caribbean, one to South America one three week trip to Southeast Asia, and two trips to Hawaii. I didn't pay for these trips with cash. Instead I ran up a hellacious credit card debt and had to seek out a debt reduction program to keep from going under. I brought it all on myself. Yet, despite my debt reduction program I continue to receive offers to more credit and more credit cards each and every week.

Another thing that contributes to the huge credit card debt crisis is the extortionate interest rates they charge. With the prime about 7 percent, credit card companies are charging up to 3 times that. A quick check of the six credit cards I still have revealed that the interest rates range from 17 percent to 24 percent. The credit card companies are participating in legalized theft yet you can bet that soon they will be before Congress crying about how much money they are losing to unpaid debt and abandonment of payments. They brought it on themselves.

An old friend died about 10 years ago. He was in his early 80s. At the time of his death he had 16 credit cards that were maxed out. He just paid the minimum bill on each of them. His philosophy was that he was going to die sometime soon anyway, and the credit card companies were foolish enough to keep offering him cards, so he kept maxing them out and paying the minimum while traveling to go birdwatching every possible moment he could travel. As he said more than once "once I'm dead will I really care how much I have on my credit cards?" It was a philosophy I picked up from him.

If I croaked tomorrow it will be up to the credit card companies to deal with the aftermath, not me. I could care less about Bank of America's bottom line. They gave me a credit card despite me having no fiscal discipline. They can absorb the consequences.

1 comment:

Beach Bum said...

Much of the blame for this debacle rests with the credit card companies who constantly flood your mailbox with offers for credit cards; some companies specialize in giving credit cards to people with poor credit histories...

Hell, their commercials tell you to spend, spend, spend, get cool rewards, and spend some more. I believe in free will and that everyone makes their own bed to a certian extent but those commercials are criminal. Great blog, by the way.