Credit Card Bubble is next wave of pain for U.S.

The reasons for debt are many and varied . . . some maybe went broke trying to provide for a new partner who, after coming off a nasty marriage and a few opportunistic scumbags, could not afford a house, to feed her kids and provide them with the necessities of life and expected to be able to pay back what the other put out once her house was sold, only to have one of the aformentioned scumbags default on a co-signed loan resulting in that lender to go after her such that she lost that house and the $30,000 of equity she had, thus leaving her new partner with a whack of debt that grows exponentially by the month due to jacked up interest rates....

There is a difference between irresponsible credit and those that rely on it out of desperate circumstances.

My daughter has a friend who's mother just got laid off and the father's hours were cut from 40 to 15 - unfortunately they worked for the same company.

I know these parents, they are both very hardworking, very budget-minden people. They drive a car almost as old as ours ;-) lol but they had to pay their electric bill with their credit card this month and it saddens me to see a system that allows these companies to loan shark their interest rates and fees to people who are desperate.

This situation actually has touched my 12 year old daughter who is just devestated for her friend. She constantly asks me if there is anything we can do. It has also put fear into this group of children that it could happen to their mom and dads. My daughter asked me the other day if we would lose our house if daddy lost his job. This has never been a question asked by our very typical 12 year old.

It saddens me further than these young children are exposed to this type of fear and stress at such an early age.

I think this really should put it in perspective for many people.

On a personal note, May God bless you and your family thru such a horrible, saddening, and sobering devestation.

Originally posted by dr_strangecraft


Some are caring for a child dying of cancer. You can blow off the chemo, since it quit working months ago. Makes her throw up all the time anyway. But you'll do anything to buy her the pain pills, won't you?


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I think it's nice you want to protect your daughter, but perhaps now is a great time to explain to her about family finances, giving her an education will serve her in the future. I know you don't want to scare her, but you also don't want to coddle her either, in case your husband DOES lose his job.

You may want to consider sitting her down when you pay the bills, take her to the bank and have her deposit your paycheck, explain that food doesn't magically appear, or money isn't endless on your debit card. Likely, she will come up with way to save money. Once I did that with my daughter, she stopped asking to buy coffees and sodas.

I also recommend you consider getting her a teen credit card NOW so she can learn how to manage finances before she moves out of the house and the novelty of a credit card will be long gone before she is in college.

I began allowing my child at age 14 to go into the grocery store alone with a short list of items and the debit card. I also allow her to make decisions whether to buy two of something on sale, or substitute for another item. How else is she going to learn to shop?

At 12, I began teaching my daughter real world skills, like how to put gas in the car, do laundry, shop, self-defense, etc.

She's asking questions, so it may be time.

I've already started her on saving and I would not even consider letting her with the teen credit card - our bank calls it an allowance credit card. I make her pay with cash for everything and she has to put 40% of her allowance / earnings in her savings account.

I do agree that children need a deep understanding of financial matters. They need to understand that it takes money to put food on the table and leaving the light on costs $ and that budgeting is of the utmost importance. My daughters give me a run for my $ in the grocery store - they find better sales than I do ;-)

I think that the financial education for our children should not be associated with fear. That's stress enough for an adult - I don't think it should be a stress for a child.



reply to post by VelmaLu

Originally posted by angelonmyshoulder
I think this really should put it in perspective for many people.

On a personal note, May God bless you and your family thru such a horrible, saddening, and sobering devestation.

Just to be clear angel, that isn't me, caring for a dying child. It's a composite of 3 non-drug-using homeless people (2 female, 1 male) at the homeless shelter where I volunteer.

And I wasn't just "being dramatic." Medical debt is the number one reason for personal bankruptcies in the USA in the past year.



Now for what is really me.

I am having to move, due to a real (non-terminal) illness in my immediate family, but my job is coming to an end anyway, due to the financial sinkhole the economy has fallen into. Right now, we are making all payments on all our debt including all credit card debt. But it is obvious that I will be facing a layoff in the next 2 months.

We turned off the credit cards years ago; but as others point out, the ridiculous interest means you'll pay forever like the most pathetic medieval peasant.

The big question is how we will pay the mortgage if I am "cut loose" before I begin new work or we sell the house. Every week that goes by without a buyer, the less likely we are to escape foreclosure.

We did make poor decisions. A decade ago. Those are my fault. The economic collapse is NOT my fault. period.


Who do you blame for vice---the prostitutes, or the pimps??



[edit on 21-11-2008 by dr_strangecraft]

I'm glad it wasn't you! Although I am sorry it was anyone!

This situation sometimes feels so out of control that it's hard to relate the true stories to the people. I don't care how the people got in debt (although I must admit certain things really bring out my soft side) My point is... it shouldn't be happening to anyone...anywhere. Yes there are the ones who just wanted a big screen T.V. but there's so many who it was something so completely else. There does exist the Retiree on Medicare with extremely fixed income who needed roof repair, their is the young couple with a sick child, there are so many true excuses that are actually beyond human control. To say it is a person with financial irresponsibilty is just truly not fair.. There are just so many stories... no, I am wrong... There are just so many people out there with circumstances that are beyond their control and the system exploits them to a point almost unhuman. For the person who had to have the same T.V. as the "jones's... have fun paying it off" to the people who were so very desperate, and so very in need... I am with you in not understanding how such a thing could happen in the U.S.A.

/pg3#pid5356001]post by dr_strangecraft[/url]

Simply put, shopping does not feel good right now, with or without easy credit.

"It's no longer cool to display ostentatious spending habits when those around you are losing their jobs and homes," said Darrell Rigby, head of the global retail practice at consulting firm Bain & Co.
www.reuters.com...

www.reuters.com...

Retailers, desperate for revenue in a dismal selling environment, "are trying to sell anything at any price," said David Bassuk, managing director in the retail practice of Alix Partners, a business advisory firm.

"They are pushing the credit card down your throat because they find when you go into a store and they offer you 10 percent off if you open a credit card today, it creates a motivation to buy more stuff," Bassuk said.

Red Gillen

reply to post by dr_strangecraft


I'm being judgemental because I have seen grace under fire in the most unbelievable circumstances. I have seen people beat the cycle of deprivation without any form of credit whatsoever. Maybe they have just been lucky perhaps, who knows. Or perhaps I judge people too harshly only when they defer blame needlessly.

Nobody forces anyone to take out credit. I can empathise (superficially) with the father of a sick child who takes out credit for medicine. But what would he do if that credit were unavailable? Would that in some cases be better- if he had no choice?

Im afraid I reserve sympathy only for those who are placed in situations which aren't their fault. I do feel sympathy for the father of the sick child, or the man who loses his job and has to pay the heating bill with his credit card.

But for those who run up debt buying designer clothes and the latest mobile phones, or who were irresponsible only out of their own ignorance and greed... my sympathy is non-existant. They are thrown to the wolves of consequences.

Originally posted by 44soulslayer
But for those who run up debt buying designer clothes and the latest mobile phones, or who were irresponsible only out of their own ignorance and greed... my sympathy is non-existant. They are thrown to the wolves of consequences.

Aye, therein lies the rub.

We can never know, how it is with someone when they tell us the "story" of how they got in trouble. Every coin has two sides.

As someone who is laboring to pay off old credit card debts, I will offer a notion that is pretty critical for turning one's personal finances around, and that is the "cost of job."

Frequently when someone has financial troubles, onlookers will say, "he just needs to get out and find a better (or second) job." But the fact is, every job costs the worker some expense, just to show up and do the work.

For instance, ranch work requires you to buy your own work clothes including leather boots gloves, tack, saddle, etc., which wears out or gets destroyed pretty frequently. Just the cost of degreasing detergent made a dent in my meager pay, back in the day.

Every job has this. With higher profile work, bosses generally expect a certain "presentation" of lifestyle. Stuff like a certain grade of suit, silk tie, running or cool vehicle etc. And I worked at a place where bringing your own lunch marked you as a broke hillbilly, instead of a player.

Now, here's where it gets tricky. No one "has" to use credit; but if you are going to get a job as a bank executive, you'll need some nice suits now before your first paycheck hits.

Of course, you don't "need" that. You can always go back to shoveling horse hockey and cleaning stables. No one is "forcing" you to quit that job, borrow money for the right clothes, the right car, the right house, and the right job.

I have been "cutting corners" at my job. I drive a car that needs work, because it's paid for. and the bosses roll their eyes. I bring a sack lunch instead of hitting the bar with the boys. It probably hasn't helped me in the competition to avoid layoffs---but then, I suspect my job would have come to an end by now, anyway.

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What you need to understand is that the people at the top are untouchable. Even if the middle class evaporates away and the lower class eats each other to survive and the entire economy is wiped out in every single country around the globe, there will still be a handfull of rich SOB's who in all likelyhood did this on purpose as a big global conspiracy, they will tweeze their pointy moustaches, and laugh nyahahahah as they lounge in their super luxury fortresses, sipping cognac.

the whole world is dying but someone is profiting and becoming more powerfull and dominant. It's very sad that the lust for power blinds men so completely. Enjoy your post apocalyptic nightmare world you scumbags in power.

SAN FRANCISCO (Reuters) - The need by U.S. retailers' to sell in hard times has put them at odds with the lenders backing their credit cards. While stores aggressively promote use of their cards, lenders are increasingly wary of consumer defaults.

That conflict of interest, a direct result of the global credit crunch, could fuel escalated risk in 2009 following a holiday season in which more consumers are offered store credit cards that they may be less likely to repay.

"From the retailers' point of view, the more people who open up cards, the better it is for sales," said Laura Nishikawa, an analyst with Innovest Strategic Value Advisors.

But in the midst of the economic downturn, banks are working hard to protect themselves against defaults from existing cardholders, not to mention weeding out consumers with bad credit and maxed out accounts who seek new cards.

www.reuters.com...

Maybe it is time for the USA to go out of business. It is insolvent, and any business would have folded up years ago. Heck if my job goes, I will just hope that student loans go belly up and I will throw mine to the wind to.

Originally posted by angelonmyshoulder
It started with the dot.com bubble.... next was the housing bubble which introduced the mortgage crisis. Now America prepares for the next cirisis which is the Credit Card Bubble.

Credit card companies are already preparing for the next financial crisis to hit America. They are reducing credit card limits and increasing interest on even the most prudent and responsible of buyers.

Granted, I would not be an advocate of credit card debt as the most sensible of financial decisions, however, for the millions who have lost their homes, their jobs, and who have had to pay for groceries and gas (all those frivilous purchases

) I don't see how these companies can come in and force these people to spend additional money on already insane interest rates.

Granted, times are tough... but does that mean taking advantage of people in already tough circumstances????

What a messed up world.

Since when is anyone forced to have a credit card? If one does not like the rates their card charges, they should pay off the card, if they carry a balance, and get a different one. They are the ones taking advantage of the credit issuer, as many have no intention of paying their cards off.
My card is 3%. Seems pretty reasonable to me.

Well, if you can't pay your credit card, don't.
Credit score won't be important in a short time anyway...
They can't sue 200 million people!

Capital One U.S. card delinquencies rise, stock down

By Juan Lagorio

NEW YORK (Reuters) - Capital One Financial Corp (COF.N) said defaults on its U.S.-issued credit cards rose in January as unemployment soared, triggering fears the bank could slash its dividend and sending its stock down to the lowest level in nearly 13 years.

Two analysts said Capital One might have to cut its dividend in 2009 -- only one year after a 14-fold increase -- as growing credit losses and the need to set aside money to cover those losses are expected to dent its profits.

In a regulatory filing on Tuesday, the company said the annual net charge-off rate -- a measure of credit default -- for U.S. credit cards rose to 7.82 percent in January from 7.71 percent in December, while the rate for loans at least 30 days delinquent increased to 5.02 percent from 4.78 percent.

The McLean, Virginia-based company said it expects loan losses from U.S. cards to increase to 8.1 percent in the first quarter.

In auto loans, Capital One's charge-off rate rose to 6.09 percent in January from 5.93 percent in December.

In January, the firm, one of the largest issuers of MasterCard and Visa credit cards, posted disappointing quarterly results and forecast more credit losses in 2009 as debt-burdened American consumers struggle with the highest unemployment rates in 16 years.