Credit Card Delinquencies Climb - rate highest since 1980...

AP ^

[RCW2001]

Credit Card Delinquencies Climb

By JEANNINE AVERSA, Associated Press Writer

WASHINGTON (AP) - Late credit card payments shot up in the second quarter, suggesting that more Americans were having trouble paying bills as the economy weakened and layoffs mounted.

The seasonally adjusted percentage of credit card accounts 30 or more days past due rose to 3.93 percent in the April-June quarter, up from 2.99 percent in the first three months of the year, according to a quarterly survey released Friday by the American Bankers Association.

The delinquency rate on credit cards in the second quarter was the highest since the association began tracking it in 1980.

``We're seeing the effects a stagnant economy and increased layoffs can have on consumer finances,'' said James Chessen, the association's chief economist.

The nation's unemployment rate worsened in the second quarter as the economy's growth nearly ground to a halt, expanding at a rate of just 0.2 percent, the weakest performance in eight years.

Even before the Sept. 11 attacks on the World Trade Center and Pentagon (news - web sites), the economy was struggling. The unemployment rate soared to 4.9 percent in August, the biggest one-month jump in more than six years.

Trying to stabilize the economy in the wake of the attacks, the Federal Reserve (news - web sites) cut short-term interest rates Monday for the eighth time this year, pushing borrowing costs to a nine-year low.

``While lower interest rates have helped some consumers refinance their debt, it's clear that refinancing cannot solve all consumers' financial problems,'' Chessen said.

Meanwhile, the delinquency rate on a composite of other types of consumer loans, including auto loans and closed-end home equity loans, climbed to 2.51 percent in the second quarter, highest since the third quarter of 1997. In the first quarter, the delinquency rate on a composite of loans was 2.40 percent.

Some Americans might opt to use some or all of their tax-rebate checks, which were mailed starting in July, to pay off debt, economists said. But the Bush administration is counting on people to spend the money, which would help the economy.

Economists fear the country could fall into recession if consumers - who have been keeping the economy afloat - sharply cut back on spending in the face of the attacks.

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[RCW2001]

These are only pre-attack numbers...could be horrendous by years end.

BTW...I believe I'm correct in saying that the Congress never sent to the President's desk the "Bankruptcy Reform Act"...

Banks can not be happy about this and I doubt that it could be passed now in this time of economic uncertainty.

[Extremely Extreme Extremist]

Stupid people who can't handle their finances shouldn't use credit cards then....

[boomop1]

But wait, call before midnight tonight and get 2% for the first 10 days..

[gjenkins]

Irrational exuberence coming home to roost ... again? Our consumer economy is taking it on the chin.

[xzins]

I agree that stupid people shouldn't use credit cards, but get this.

My son starts college shortly and he's been deluged with half a bazillion offers for cards. No credit check, no nothin'. I've been a counselor for years, and I'm amazed at the number of broke, no-income people who get credit card offers (no credit check) and then get the cards.

The kids and the unemployed then run up debts, and banks act wounded and want the authorities to enforce for them when these essentially income-less people don't pay.

I don't think it's any different than those who bought Cisco at hundreds per share. It was an unwise investment. There was all kinds of evidence it was an unwise investment and now those who bought that stock are suffering for their lack of wisdom.

Imagine if those who lost from unwise investing could get the police to go force their money out of either Cisco or those they bought the shares from.

Banks who throw these credit cards at folks who aren't credit worthy should sink in their own mire with no one to help them. Any parent knows you don't dump cash on a kid at college....and God knows you don't expect to see it back.

Let 'em file bankruptcy and let the banks suffer on this kind of unwise investment on the part of the bank. They'd never dream of financing a home loan without income, collateral, and credit history.

[taxtruth]

Anyone who has credit card problems or mortgage problems should go to www.dueprocess.org because they can help you in ways that you have never dreamed.

[taxtruth]

The credit card companies make more money if you don't pay than if you do.Not to many people understand the money system in this country except a handful and the sleezy federal reserve "greenspan and his croonies".

[taxtruth]

If you understood how money is created you would understand that the banks never loaned anybody anything!You created the money that you were lent via borrowing so the banks never lose a dime because they are protected via of their own fraud!Your promise to pay creates the money not the banks assets.They risk NOTHING.

[xzins]

You created the money that you were lent via borrowing so the banks never lose a dime because they are protected via of their own fraud

I don't understand what you've just said here. Can you break it down for someone who's probably burned too many braincells in his first 49 years on this earth? Thanks.

[netman]

Silly you, Thats who the credit companys target...

[Bella_Bru]

Xzins, I work on campus of the university I attend. One of the things I do every semester is go to the dorms and talk about financial responsibility.

This is most important in the fall because the credit companies line up around the quad and bookstore to rope in 18 year olds and their unsuspecting parents. The parents sign on as co-signers for their kids who have never worked a day in their lives.

The end result is usually a $5000 debt and parents with bad credit.

[membrsince]

Worse than a bazillion credit card applications to kids -- the CHECKS I get in the mail, saying all that I have to do to activate a credit card account is to deposit the check. Fleet Street Bank is the worst for this.

What happens when a clerk in the mail room steals about 500 of these and sells them to somebody who can launder them? 500 people get their credit blasted.

[xzins]

The end result is usually a $5000 debt and parents with bad credit

Do you agree that the banks should have to suck up the loss?

Although any parent (adult?) who would knowingly co-sign a credit card for a teenager on his/her own on a college campus is an imbecile. Maybe we should have an imbecile relief act in the bankruptcy law. They don't have to pay, but we can bring back "the stocks" and force these folks to sit in them in the public square as targets for public derision and humiliation.

[Bella_Bru]

Should the banks have to suck it up?

I don't have a blanket answer. Sorry. Obviously, many cases of bankruptcy are people just spending beyond their means. But there are people who do suffer loss of work from injuries, jobs moving, etc. and do need bankruptcy.

[xzins]

There is VERY little that I agree with Democrats on, but last year when they were re-doing the bankruptcy laws and granting more strict laws to the banks, I wanted to puke at the Repub's on the issue of credit card debt. If some adult with a job runs up his card, then fine, nail him. But any bank that gives cards or those checks you mentioned to college kids should be ordered by law to run TV adds where they publicly admit to being village idiots.

[Diddle E. Squat]

Am I the only one who is hoping that consumer's NOT spend, but pay down debt and increase savings? As a whole we need to be saving and investing more, and any major shift towards this would have disrupted the economy, so why not now why the economy is realigning? Greater fiscal responsibility will pay off in the long run.

[xzins]

I mean suck it up on the college kid cards that they hand out like candy, or on cards they issue without a responsible credit history check.

[lewislynn]

I don't understand what you've just said here. Can you break it down for someone who's probably burned too many braincells in his first 49 years on this earth? Thanks.

Think about it this way. After the WTC terrorist attack the FED said they would release 38 billion dollars. Since the FED doesn't control the tax revenue, where did they get 38 billion dollars?....

A)...Create it out of thin air...simply put it on paper.....they don't even have to print the dollars anymore.

[xzins]

Don't they have the 38 billion in shareholder accounts in their banks?

[Enough is ENOUGH]

Every time the banks make bad loans We The People wind up paying for it. I wonder how many terrorists in the U.S. got free credit card approvals in the mail.

[lewislynn]

Use your credit card and get "free gifts" and best of all "free" miles on a bankrupt airline.

With all the frequent flyer miles and other "free" air miles is it any wonder the airlines are bankrupt?

How many people do you know that have flown for free for using a credit card, for example...I know a lot.

I always wondered when or how "free" air miles would come to an end....now I know.

[conservativejunkie]

I have my own thought's about all this credit being handed out by all the banks. Ever hear of DEBTOR'S PRISON? HMMMMMM!

[Bella_Bru]

If the banks had any sense, they woulkdn't hang out on college campuses.

I don't think the banks should have to eat it when the college kids blow it.

[Extremely Extreme Extremist]

LOL!

[membrsince]

"But any bank that gives cards or those checks you mentioned to college kids should be ordered by law to run TV adds where they publicly admit to being village idiots."

I don't know if they send the checks to college kids or not, but I get several a year. According to my credit report, which I check at least once a year, these checks usually show up a few months after there is an "inquiry" posted by a bank that is "fishing" among credit histories for good leads.

. The checks I get head right into the shredder, of course, but how do I know the ones that appear in the mailbox are the only ones that have been directed to me?

Now, another rant: I have a common name -- there is a whole page of people with the same first and last name in the Baltimore phone book -- and my credit history has already been polluted several times by bad loans made, and credit cards issued, to people with my name, but entirely different addresses and social security numbers

. The trouble is, loan companies and banks farm "bad" accounts out to collection agencies, one after the other. So after I finally convince one collection company in, say, Atlanta that they've got the wrong guy, the bank refers the account to another collection agency in Dallas. The new agency, of course, has no idea the account is stale, so the whole mess starts over again.

Always check your credit history at least once a year. You may be amazed at what you've been up to. And always deal in writing -- phone calls are useless. Check out the FTC site if you think you've been a victim of identity theft, or if your credit history is polluted by false entries.