Ladies and gentlemens please fasten your seatbelts for another dive: Now it's credit cards...

[originalpckelly]

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x3785722

NEW YORK, March 16 (Reuters) - U.S. credit card defaults rose in February to their highest level in at least 20 years, with losses particularly severe at American Express Co (AXP.N) and Citigroup (C.N) amid a deepening recession .

AmEx, the largest U.S. charge card operator by sales volume, said its net charge-off rate -- debts companies believe they will never be able to collect -- rose to 8.70 percent in February from 8.30 percent in January.

The credit card company's shares wiped out early gains and ended down 3.3 percent as loan losses exceeded expectations. Moshe Orenbuch, an analyst at Credit Suisse, said American Express credit card losses were 10 basis points larger than forecast.

In addition, Citigroup Inc (C.N) -- one of the largest issuers of MasterCard cards -- disappointed analysts as its default rate soared to 9.33 percent in February, from 6.95 percent a month earlier, according to a report based on trusts representing a portion of securitized credit card debt.

"There is a continued deterioration. Trends in credit cards will get worse before they start getting better," said Walter Todd, a portfolio manager at Greenwood Capital Associates.

[ixion]

1. well, the across the board rate hikes don't help

but, hey, who the hell gives a crap about people who have to work for a living. :sarcasm:

[ihavenobias]

10. Exactly. It's completely illogical.

It's like they are SO locked into making money short term that they don't realize that raising fees and rates in the current economy actually means they'll LOSE money because rather than getting a small minimum payment each month they'll get NO payment from some.

[DJ13]

2. Insanity

: doing the same thing over and over again and expecting different results.
Albert Einstein


Raise rates, see increased delinquencies.

What do these insane credit card companies do in response?

Raise rates yet again.

These CC companies need to be nationalized, and have their insane boards thrown out on the street.

[originalpckelly]

4. Something tells me they'd still see an increase...

people are losing their jobs and probably can't pay their credit card bills.

[MercutioATC]

3. I think I might have mentioned this a while ago to the "Obama's plan will fix everything" people...

It's gonna get worse before it gets better, this little bull rally we saw last week notwithstanding.

[originalpckelly]

5. I know, it's like a ball bouncing down a very steep hill.

It will tend to bounce up every once and a while when it hits a rock, but it's still going down a steep hill.

[tangent90]

7. Or even the little bull rally.

:evilgrin:

[MercutioATC]

8. Geez, I'm losing it....

Corrected, thanks :)

[tangent90]

9. Roger that

:-)

[originalpckelly]

13. If it's a rally in an otherwise down trend, it's a bear rally.

I've heard tons of the CNBSers say it, as well as Bloombergers. So I think it's OK, though what you said makes sense to some extent.

[tangent90]

14. Glurk. Okay, I have always thought it was really simple, prices rise=bull, fall=bear.

Apparently it depends. I love stuff like that...like I love 'standards'...there are so many to pick from!
:silly:

edit - bottom line, I had never heard the term before. ;-)
\
http://www.investopedia.com/ask/answers/129.asp

[originalpckelly]

17. It's all good...

I'm sorry to go all language nazi on you.

[tangent90]

22. No problem, I'm a certified grammar Nazi in my own right.

:D

[MercutioATC]

16. Thanks for the support, but it was kinda a typo....

I've heard an upswing in an overall market called a "bear rally" too, but I did mean to say "bull rally".


Either way, it's just a bump. Things WILL get worse.

[madrchsod]

6. these guys live in a fantasy world

instead of lowering rates they increase them driving away any hope of recovery and pissing off the good customers by raising rates....what a business model!

[originalpckelly]

11. They're raising interest rates to get you to pay back sooner.

I bet the thought is that if you have to pay higher interest, you'll work your ass off to pay it all back sooner.

The problem, however, is that most people can't just pay off their credit card bills so quickly, because they didn't have enough money to buy the shit they bought on the cards in the first place.

[NashVegas]

25. That Would Be a Great Strategy, If Not For One Thing:

So many people who ran up debt on credit cards because they had no means to pay cash, ie, unemployment or health insurance issues and/or mistook access to credit as access to income.

This is something consumers were not alone in; businesspeople and financiers did the same thing.

[C......N......C]

12. There is no bottom. Obama has it handled.

When it finally gets hot enough to set off the fire alarm the building is already too far gone to save. It just has to get so bad that he appears he is forced and has no alternative but to take the drastic steps needed.

[TBF]

15. Oh, so it's a "controlled revolution". Why didn't I think of that?

Maybe because most of the socialists I know wouldn't be so keen on people sleeping in tents until the bottom drops out far enough.

Do tell how "bad" it has to get, and what "drastic steps" we can look forward to.

[C......N......C]

27. Sorry.

Thought it was obvious I was being sarcastic. They don't have a clue. I think that if he knew it was going to be this bad two years ago, he wouldn't have run for office.

[TBF]

28. On this site? I see posts like yours every day and they are serious.

Whether Obama knew or suspected how bad is sort of moot at this point because they've got him now. At least we don't have Palin praying for her rapture from 1600 Penn Ave., but it really is up to us.

[newfie11]

18. If people have no job and no money but do still have credit cards

BINGO! What do you think they will use for food. Rob peter to pay paul until they are cut off. This was coming!

[originalpckelly]

Yep.

There are tons of people living in hotels, that doesn't come cheap. And it's going to run out soon.

[williesgirl]

19. But Amex still pd their CEO $29 million in bonus money - can't be hurting too bad!

[originalpckelly]

21. I will bet you they're either going to go bankrupt or we'll have to bail them out...

before all is said and done. This is not over by a long shot.

[tangent90]

24. They've sent me apps with airline 'tickets' with zillions of bonus miles

every month for the last year or so...one just a week ago. I know I can opt out of these offers but I'm just perverse enough to see what lengths they'll go to. :-)

[Canuckistanian]

20. Gee, analysts were "disappointed" by Citi's default rates?

WTF were they expecting??

[Imagevision]

23. Credit cards / Auto repo's are going through the roof...

[cliffordu]

26. pleeeeze don't bail them out.....PLEEZE.....

[DemBones DemBones]

29. Bail out the debtors so they can start over, without credit cards.

If the cards were all like American Express and had to be paid off every month, there would never have been a problem.

[Gin]

30. AmEx is now a bank and they got bailout money....