Is credit card crisis next?
Credit card debt may be the next bubble to burst although the problem will not be as big as the sub-prime mortgage meltdown. The debt is also smaller than the adjustable rate mortgages that are due to reset in coming years.
However, a credit card crisis would impact companies that haven't been so directly impacted by the mortgage mess. As with mortgages, credit card debt has been packaged as sold to investors. It was a way for banks to reduce risk.
Despite interest rate cuts, credit card interest rates and penalties have skyrocketed recently. Part of this is to cover increasing credit card default rates and part to raise cash in a tight credit market. The average US household now owes $10,678 in credit card debt, up 29% from 2000.
However, a credit card crisis would impact companies that haven't been so directly impacted by the mortgage mess. As with mortgages, credit card debt has been packaged as sold to investors. It was a way for banks to reduce risk.
Despite interest rate cuts, credit card interest rates and penalties have skyrocketed recently. Part of this is to cover increasing credit card default rates and part to raise cash in a tight credit market. The average US household now owes $10,678 in credit card debt, up 29% from 2000.
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Labels: credit card crisis, credit card debt
posted by Paul Kekai Manansala at 7:33 AM
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