Banks are Hurt by Credit Cards

The New York Times has this story: “Rising Credit Card Losses Are Next Challenge for Banks“.

Eric Dash and Andrew Martin do a good job of explaining the extent of trouble banks are having and are going to have with credit cards. “Even the government’s grim projections may vastly understate the size of the credit card troubles in store for major U.S. banks.”

Canadian Credit Card Bubble

It’s small comfort, but we in the U.S. are not alone in the credit card bubble.

ConsumerAffairs.com offers, “Canadians Crushed By Credit Card Debt: Loonie soars but so does unsecured debt”, an article from November 15, 2007 that begins, “the U.S. isn’t the only nation buried by massive consumer debt.”

Highlights about Canadian consumer debt:

90% of surveyed Canadians had more debt than five years ago
28% had no idea of what their credit card interest rate was
25% had between $10,000 and $40,000 (excluding mortgages)
53% had no budget

Guiding Financial Principal: Don’t Spend What You Don’t Have

In “Some Chuck Credit Cards to Avoid Late Fees, Debt“, good arguments are made for avoiding the use of credit cards – entirely.  Of course, the article also contains all the usual pro-credit card positions related to building a credit history, maintaining a high FICO score, and convenience.

And the article offers a few significant facts: 58% of people with credit cards don’t pay their balance in full each month and for those who don’t pay their balance in full each month, their average balance is $17,103.

The guiding financial principal of not spending what you don’t have is the philosphy of a 25 year old, New Yorker interviewed for the story.  She sounds like a wise young lady.

Credit Card Interest Rates on the Rise

USA TODAY reports, “Credit card rates hustle higher“, in an article that describes what banks are doing to make up for losses on consumer lending and home loans. Some credit card customers’ interest rates are being increased by 100%. And good credit scores don’t seem to matter according to the article. It’s not looking pretty.