Credit card default tsunami
Banks are at it again, tightening credit limits, raising standards, and closing accounts. They have also been slashing rewards, raising interest rates and increasing fees on responsible and unwitting card holders.
According to this Reuters’ article credit card defaults are on the rise:
Analysts estimate credit card chargeoffs could climb to between 9 and 10 percent this year from 6 to 7 percent at the end of 2008. In that scenario, such losses could total $70 billion to $75 billion in 2009.
“People underestimated the severity of the downturn we are experiencing and I wouldn’t be surprised to see them north of 10 percent,” said Todd, who added American Express was most exposed to higher credit card losses, given its sole reliance on the industry.
Credit card lenders are trying to protect themselves by tightening credit limits, rising standards, and closing accounts. They have also been slashing rewards, raising interest rates and increasing fees to cushion further losses.
Meredith Whitney, one of Wall Street’s best known and most bearish bank analysts, estimates that Americans’ credit card lines will be cut by $2.7 trillion, or 50 percent, by the end of 2010—and fewer Americans will be offered new cards.
So banks feel justified to slash your benefits by unilaterally changing credit card agreements.
On the other hand, banks receive billions in bailout money which will be paid with our taxes.
Is this fair?
Of course not. The next time you receive a notice with a poisoned pill credit card term from your bank, I suggest you call
- the Fed (202-452-3693), for state-chartered banks supervised by the Fed,
- or the FDIC (800-934-3342), for state-chartered banks supervised by the FDIC,
- or the OCC (800-613-6743), if the name of the bank contains National or ends with N.A.,
- or the NCUA (703-518-6360), for Credit Union cards,
- or the OTS (202-906-6000), for Thrift, Savings and Savings and Loan institutions,
to express your disgust of the banks’ total disregard of their clients well-being, in contrast to the red carpet treatment they receive from us —through our hard earned tax bailout money.