Looks Like the Bankruptcy Bill Backfired on MBNA!

[Stephanie]

Hah!

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http://www.thestreet.com/_tscrss/stocks/banking/10219019.html

MBNA Hit by Customer Paydowns
By Matthew Goldstein
Senior Writer
4/21/2005 2:28 PM EDT

Shares of credit card giant MBNA (KRB:NYSE - commentary - research) were getting squeezed in Thursday trading, after the company announced a 94% decline in first-quarter profits and offered a dismal earnings outlook for the rest of the year.

The Delaware-based card company's stock plunged $3.70, or 16%, to $19.41.

***

MBNA said its earnings were "impacted by unexpectedly high payment volumes'' from its U.S. customers. The move by customers to pay down their credit card bills, particularly on high-interest-rate cards, reduced the dollar value of managed loans in MBNA's portfolios.

Card companies don't make as much money when customers either pay their bills on time or pay down their outstanding credit card debt.

The faster paydowns forced MBNA to revalue its interest-only strips, a type of security it uses as a hedge for its securitization business. The downward revaluation resulted in a $206 million loss in securitization activity, which is why MBNA reported an 8% decline in "other operating income'' compared to a year ago. In the quarter, other operating income totaled $1.78 billion.

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[LynzM]

1. Hey, we contributed to that!

Made a couple big payments in the last couple months! :bounce: We're hoping to be done w/CC debt by the end of the year...

[Stephanie]

2. Me too!

I just paid them off once and for all. MBNA can bite me!

[Maine-ah]

30. augh!!! I'm still working on it.

[MadisonProgressive]

80. Me too!

I had a 9000+ balance 3 months ago - now ZILCH! And I'm buying a Prius next - the motherfucking bastards! Hit em where it hurts.

[Lochloosa]

5. Same here

We "found" some money that was not expected. Every penny went to paying off our cards. It feels so good getting out from under these blood suckers. I hope they choke on all the people that will be paying off these cards.

[Carla in Ca]

52. same with us!

My husband's MBNA is almost paid off and he says he will not use it again...hooray!
Keeping accounts active but at a zero balance look good on your credit report, especially if they are several years old.
Remember that *ush thought that tax refund we got would stimulate the economy? Well, we applied ours to a credit card. We have always been careful not to incur large debts...we pay as we go.

[cyberpj]

16. Ditto here. Paid off and cancelled. Only 1 more credit card to go!

:woohoo:

[dhuss]

17. one down... 3 to go...

one of which is a credit card...

D.H.

[tabasco]

18. Congrats and keep on truckin' !

It's a good feeling when you get to zero balance.

Glad to see that many credit consumers are wising up !

[trogdor]

22. I'll be done by Labor Day.

$13,000 to zilch in three years. Not too bad.

[Media_Lies_Daily]

39. We'll be contributing real soon when our Chapter 7 becomes official.

[Beaverhausen]

43. me too! I have to keep it open cause thats the card AOL bills to

otherwise I owe them NOTHING!!! :woohoo:

[Stephanie]

45. You can switch AOL to your debit card

if you want to...

[Beaverhausen]

46. why does the thought of doing that scare me?

but you're right. I'll give it a shot.

[Renew Deal]

64. I do it.

It works. Put it in as Credit so you don't get any annoying emails from AOL. Just verify your bill every month.

[patricia92243]

75. I have my Juno ISP ($7.00 monthly) taken out of an account that I opened

and use for the web ONLY. I keep a very tiny balance in it, so if something bad happened I would only be out a few $$.

[ldf]

53. WHY are you using AOL??

you are aiding and abetting the enemy.

:shrug:

[Renew Deal]

63. Me too

I had a loan from them @ 19.99% for my girlfriends engagement ring. I didn't really need the loan, but it took the burden off for a month. I payed the whole thing down in 2 payment cycles. :woohoo: :nopity:

[drm604]

77. Me too!

I'm planning on soon eliminating it completely and then paying off any balance monthly.

[jpak]

86. me too

:)

[demnan]

3. HAHAHAHAHAHAHA!

We did it!

[wryter2000]

4. This is rich!

Fantastic! Who woulda thunk? :rofl:

[Unions]

6. I hope you don't really believe this

This was the reason for the bill passing which doesn't go in to effect for 180 days.

This is damage control so they can say "see, we've been losing money but now that this has gone in to effect all is good".

[info being]

29. Doesn't matter when it goes into effect

Peoples eyes have been opened and their attitudes are changing.

[candy]

7. People that pay on time are known as "deadbeats" in the CC business.

I hope their profits sink to the ground and the American public wises up!

[spooky3]

27. Get a credit card and use their money on float

Pay off the balance every month.

Anyone who can do that without slipping up, is using Rethug $ to help them make purchases.

[candy]

54. I pay in full and one CC is 3.99% interest and my 2nd one is 4.99 %

I won't give the bastards a dime,deadbeat that I am.

[AP]

8. Why take advantage of unsecured credit when it's not really unsecured?

People used it alot because it wasn't secured by anything. Change the bankruptcy laws so that it really isn't low risk, then people take that into their calculation about how much debt they're willing to take on.

I guess people are willing to do without a lot of consumer spending if it means they have lowered exposure to risky debt.

[On the Road]

9. I Personally Ditched My MBNA Card

after they gave me a big cash advance and then used the resulting change in credit score as a reason to change the interest rate from 8% to 22%. 100% payoff. Enough of that.

[meganmonkey]

10. They raised my rates FOR NO REASON on both my MBNA cards

from 9.99% to 15.99% on one of them - not sure of the other because I haven't used it in a long time. So f*ck them. I am all paid off. Never using their cards again. I despise credit cards anyway, but I am buying a house soon and I started getting credit cards a couple years ago in anticipation of that, to establish credit. Well, my credit is established, my score is high, and the game is OVER (at least for now...).

[Stephanie]

11. They did to me twice

And when I called them about it they said, "oh, that was a mistake, you're rate was not supposed to change" and they changed it back. Completely arbitrary, no reason, no apology.

[meganmonkey]

14. They figure lots of people won't even notice

and they're probably right. Kinda scary. But definitely not nice, or ethical.

Those money-changers are all going to hell :evilgrin:
(I don't really think like that, but it's fun to say)

[Stephanie]

20. I almost didn't notice

They had the lamest excuse too. They said, oh, we just switched from fixed to variable rates. From 5.99% to 18.99%??? Unbelievable. And when caught they switched it right back.

[truth2power]

49. I don't believe in a literal hell, but

I'll make an exception in this case. I hope they all burn in hell. :nuke:

[Fla Dem]

50. Nothing wrong with using credit cards.

I use one credit card for any purchase above and beyond normal weekly expenses which I pay for in cash. If I can't pay off the balance at the end of the billing period, I don't make the purchase. But my thinking is, why should I lay out my hard earned cash when I can float a loan for 2-4 weeks with the CC company. Always pay off your balance on time. The CC companies don't make any money off me, except maybe for the fee they charge the retailer.

[Renew Deal]

65. Cancel the MBNA cards ASAP.

Amex has never jerked me around.

[Zenlitened]

12. Sweet! Any sign that people are busting free of credit card debt...

... is a good sign!

If the credit card companies feel a little pain in the process, then so be it.

Believe me, being debt-free is SO GOOD for your mental health. Congrats to all who are beating the addiction. :)

[BurgherHoldtheLies]

13. Bwahahahaaaa. Not to mention the flood of bankruptcy filings before Oct.

What's that saying about 'and pigs get slaughtered'?

For those worrying about not having a CC for rental car purposes and other emergencies, a debit Visa/MC works just fine. Or American Express. None of these choices will allow anyone to get into debt.

[mopinko]

34. pigs get fat. hogs get slaughtered. nt

[Village Idiot]

15. Way to go!

Perhaps the more fiscally responsible among us can continue the good work and we can take a good bite out of MBNA's NEXT quarter's BLOOD MONEY!!!!

[slackmaster]

19. Bottom-fishing opportunity for investors???

Inquiring minds want to know.

[mikelewis]

32. Maybe this is why some Democrats voted for it

I've been wondering what would make a Democrat vote for this flawed bill, well, it looks as if they may just gain some vindication. Maybe Chase and Wachovia will falter as well.

This is great news.

[Vinca]

21. Congratulations to everyone paying off these bloodsuckers.

The only way to get results is to hit them where it hurts: their fat, greedy wallets.

[DearAbby]

24. I am down to one card and keeping the charges low,

Just to keep it open and raise our credit rating.

[Jacobin]

23. Wait till you see what it does to the used car market......

Under the current law, if you are upside down on your financed vehicle (owe more than it is worth) you can negotiate the payoff down to the value and usually get a better interest rate and keep the car.

Under the new law, you can't do a "strip down" of the lien....you are stuck with the whole debt and can't change the interest rate. What will likely happen, is that people will simply surrender their over financed vehicles back to the lender and go buy a $500 wonder car until they can afford some better.

The attorney who does a lot of GMAC bankruptcy work in my area predicts this will happen.

Get ready for loads of CHEAP repos guys.

[dhinojosa]

25. Mortgage and car and that's it......I owe nothing.else.

and I shred all my credit card offers away.

[info being]

26. Fuck em

I haven't paid interest for 4 years.

[alittlelark]

37. Same here... We haven't had a balance for 12 or so years.

We use them as CHARGE CARDS....... they hate us!!!;) :evilgrin:

[MsTryska]

28. awww.....the poor credit card companies don't make

money when people actually pay their bills?


ain't that a kick in the pants.



i shall now play the world's tiniest violin for MBNA.

[sendero]

31. My wife and I ...

... have a joint card with them. We are "deadbeats", we pay the full balance each month (but trust me, they still make money).

They were the first to send us a notice of our new terms. We have until late May to accept the new terms. If we don't, they can cancel the card at their convenience or just not renew it when it expires.

They annoy me so much I called one of our other CC companies (Citibank aka SaudiBank) and entered an application. The terms on the card I applied for are pretty similar to the MBNA account, but Citi has a cash-back program that actually nets me $200-$300 a year.

And besides, I really hate MBNA, who basically spearheaded the bankruptcy bill and whose policies stink, even for a credit card company. I can't wait to mail them the cut up card :)

[Stephanie]

38. They also made huge contributions to the Bush campaign

Which is reason enough to hate them.

[realFedUp]

47. and maybe they won't have as much to give Regressives next time

just the free market speaking.

[truth2power]

51. Wait a minute. Color me stupid, but....

You pay your balance in full every month, so they sent you a notice of new terms. What were the terms, if you don't mind saying.

Did they actually make it clear that they want to cancel you card BECAUSE you pay it off every month?

I think my head's going to explode! :banghead: sheesh!!

[sendero]

60. If your head explodes....

... could you give me a few minutes notice, I'd like to get the video :)

The fact that certain provisions of the member contract don't GENERALLY apply to me isn't the point.

First off, we occassionally, mostly due to my general lack of organization, are late with a payment. Say once every couple years, the bill gets misplaced, or just overlooked, or whatever.

In that case, finance charges begin accruing on the outstanding balance immediately. Interest on say $1400 for a month at 9.9% is bad, at 24.9% it is ridiculous.

But, that is not the main reason I wanted to get away from MBNA. As another poster mentioned, they give a lot of money to the pukes. Also, they were apparently involved heavily in pushing the bankruptcy sham through Congress. Yes, I'll say it - they are the poster child for what is wrong with the credit card business.

As I said, the terms of the Citibank card are not that different. But at least they offer cash back, so there is some reason to bother using the card. Also, I've had a Citibank card since 1982. I consider their customer service and IT/fraud-protection to be the best. They've never done anything stupid in all those years. Few businesses I've dealt with for 20+ years have earned that distinction.

Wait, that sounds like a Citibank commercial. Credit card companies only get so good. On a scale of 1 to 10, they are a 3, but that is better than a 1. :)

[Mich Otter]

33. A Low Cost Credit Card

I have found the best deal on a credit card is through a Credit Union. I'd recommend that anyone compare their deals.

[Pirate Smile]

35. I LOVE IT!

:D

[WillyT]

36. Karma's A Bitch, Eh Boys ???

:rofl::rofl::rofl::rofl::rofl::rofl::rofl:
:rofl::rofl::rofl::rofl::rofl::rofl::rofl:
:rofl::rofl::rofl::rofl::rofl::rofl::rofl:
:rofl::rofl::rofl::rofl::rofl::rofl::rofl:
:rofl::rofl::rofl::rofl::rofl::rofl::rofl:
:rofl::rofl::rofl::rofl::rofl::rofl::rofl:
:rofl::rofl::rofl::rofl::rofl::rofl::rofl:

[Patchuli]

40. Good! We just paid them off too.

I noticed that immediately, we started receiving all kinds of offers of loans from them. Asshats!

[tallahasseedem]

41. Good for everyone!

This is wonderful that it is having a negative impact on the company and a positive one on the wallet of average Joe America.

[Stephanie]

42. FU MBNA

http://www.opensecrets.org/orgs/summary.asp?ID=D000000114&Name=MBNA+Corp

MBNA Corp

MBNA Corp is the nation’s top credit card company and one of the world’s biggest finance companies. The company was also the biggest campaign contributor to the Bush-Cheney ticket during the 2000 election cycle and has been one of the Republican Party’s most generous contributors over the last decade. For the last five years, MBNA has been pressing lawmakers to pass legislation that would make it harder for individuals to file bankruptcy—a bill that, if approved, stands to earn MBNA at least $100 million in additional revenues each year, according to press reports. The bank also has lobbied against legislation to protect consumer privacy rights and was a leading proponent of banking deregulation.

[Skittles]

44. greedy bastards

I hope their suffering continues

[K8-EEE]

48. I Paid Off & Cancelled My MBNA After The Election

When I saw how much money they gave the Chimpster.

The credit cards want "financial responsibility?" Let's give it to them, not buy any crap from any company funding the GOP war machine, and not charging more than we can pay off.

Of course in reality they HATE responsibility, they actively solicit and campaign against it, flooding low income zip codes with fast, EZ credit. They want us to be in debt up to our eyeballs. I love this!!

[tsuki]

55. Just a memo to those who use their credit cards for business

lunches or dinners. Write on the card receipt the cash tip with amount. I learned (the hard way) that tips are charged to the card as cash advances and are subject to all the fees that a cash advance are subject to.

[lonestarnot]

56. Ha ha ha fa la la ha ha ha fuckers!

[Stinky The Clown]

57. I hope MBNA fucking dies

Pirates

[Blue Topaz]

58. HA!

I paid off and cancelled one MBNA card about a year ago, on general principle. Another card was bought by MBNA, and I just paid that one off too, so I was part of that pay-off wave! I'll be cancelling it and using only my credit union Visa card.

[vcrtime1]

59. is there going to be a race to the bankruptcy court

before the new law goes into effect?

[katinmn]

66. It's already started

MN bankruptcies jumped up 15 percent last month. (Read it. Too tired to search it.)

Between bankruptcies and paying off CC debt, the credit card companies are going to have an interesting year.

[KaliTracy]

61. could this be a bunch o' people refinancing their houses and 'rolling'

their creditcard debt into their new mortgage?

[Jacobin]

78. If so, they are jumping from the frying pan into the fire

Because credit card debt is dischargeable (even under the new law to some extent) and a first mortgage on your residence can't be changed. Pay in full or move out.

There are going to be lots and lots of freaked out fucked up re-financing people in a year or two.

[NVMojo]

62. this is inspiring!!! We all need to keep going if we have any left!

I am also going to add one day a week of no driving in my car! May make it two a week!! Cut down on use of the guzzling!! Join me!!

[womanofthehills]

67. Trying to make 3 payments a month to MBNA to pay off

I'm buying less food and starting a big garden and making paying off MBNA a priority. I figure it will take me a year but I'm self employed and plan to work harder and hopefully do it sooner.

[Eloriel]

68. 94% DECLINE in profits -- that's sweet

Bwaaahahahaha

[Roland99]

69. So that's where all of the tax cuts went to.

Don't worry. Knowing the mindless unwashed masses, those credit card balances will be right back up there in no time.

[rumpel]

70. karma

:rofl:

[hunter]

71. Hahahahahahahahahahahahahah!

My wife and I just paid them off a few weeks ago. We didn't even get the original loan from them, they bought it from someone else a few years ago. The funniest thing is we paid them a little too much (boy that 18% interest sure adds up!) so I got to send them a snarky letter demanding payment! That almost made up for all the nasty letters and phone calls we used to get from them whenever we were late. (Well actually, some of those folks in India who called us were nice... clueless and powerless, but very polite.)

I would be happy to see MBNA suffer. I hope their business evaporates, and in the final accounting all their numbers are a bright bloody red.

[Guaranteed]

72. HA! I helped out with that one!

I paid off $3,000 in one shot last month.

Screw you guys!

[Citizen Kang]

73. I'm not sure its the bankruptcy law thats doing it...

MBNA has been increasing the rates on their customers for no reason, like they have with me, and I have never paid late. I have since switched my debt to other companies and have paid off most of the rest. Screw MBNA!!!!!

[GoBlue]

74. Coffee out the nose hurts...

chuckle, snort.

[smoogatz]

76. In Today's Headlines: Bush Proposes New Legislation

that will make it illegal to pay off your credit card balance each month, unless you're extremely rich. Republican lawmakers hailed Bush's "Responsible Borrowing Bill" as a major step forward for the culture of personal responsibility Bush hopes to forge.

[MadisonProgressive]

81. And the 'Ownership Society' requires owning debt too!

[Eliot Spitzer 2006]

79. I couldn't have envisioned a Better Outcome

This is perfect - people paying down their debt and MBNA makes less money.

[warrens]

82. This is going to be good...their profits are going to evaporate

Interest income is, believe it or not, not particularly profitable. It more or less covers their costs and marketing expenses.

The money comes from fees and add-on products, like insurance fees, and the interchange, the fee they collect from a retailer every time you use their card.

Interest income has been predictable for so long that they took it for granted. So for a few million bucks in bad debt (most of the bad debt is going to be charged off even under the new law), they basically ATE THEIR SEED CORN.

Fuck em.

[Paintedlady]

83. I did it too!

MBNA suddenly started to raise my rate every month it seems. It's now
17.28%, it used to be 7 something before they bought the card. So I transfered $3000 to a card that offered 2.9% for the length of the loan, and next week as soon as my paycheck and tax refund clears I will pay them off in full. I'm also about to sell a truck and that will take care of all my collected CC debt. Never again! I'm going to pay cash from now on.
I can't wait to tell them why I'm cancelling the card. Hahaha!

[neuvocat]

84. Apparently they didn't figure it out.

They thought that they were being too kind to their customers without realizing that those protections actually HELP them to do business rather than hurt them. When people anticipate problems without any sort of protections then they realize that the risk is no longer justified.

[freestyle]

85. Yup, just paid mine off.

The low intro rate for balance transfers did come in handy though. Then there were a few months on their low fixed rate. Of course, it is not fixed at all. After I made the last payment, I got a notice of a rate increase. Not a good way to entice me to ever use that card again. They got a notice of a cancellation. Bye motherfuckers.

[Spock_is_Skeptical]

87. BWAAHHAHAAAHAA!!!! Take that, greedy jackasses.

Poor widdle babies.... I am just bubbling over with sympathy for them.

HAH!

[Montauk6]

88. The Revolution Will Not Be Financed in E-Z Low Monthly Payments!

[Stephanie]

89. Is it possible all the shenanigans from MBNA experienced by posters above

were deliberate on behalf of MBNA because they knew they were in trouble and were desperate to increase revenue? If so, wouldn't that be an Enron sort of fraud scenario?