Business

Credit cards defaults- consumer stress
by Silvia Szarkova

After reporting lower credid card defaults in July, the sparkling optimism among the financial companies is being flushed away these days- realising that defaults are higher than ever since the set up of the reccesion-and this is a tough wake-up call for everybody meaning that the consumer lending woes are far away from the over. The Bank of America Corporation and Citibank Corporation are those who reported higher credit card debt defaults in August. "People have gotten very bullish with the July data, and (the August data) raises the question about how fast the consumer will get better. People were assuming the pace would be pretty rapid, and this maybe slows the pace ! down,“ said Scott Valentin, an analyst at FBR Capital Markets. This emphasized the assumption of the experts who say that getting better in July is just an seasonal effect like tax refunds. According to the Bank of America, their charge off loans- loans that the bank does not expect to be paid back- rose to 14.54 percent from 13.81 in July. Citigroup- the largest issuer of MasterCard declared that the charge off rate rose from 10.03 in July to 12.14 percent. JPMorgan Chase & Co- the largest issuer of Visa card- said their charge offs were 8.73 percent in comparison to 7.92 previous month. Credit cards debt usually tracks unemployment- in previous month it reached 9.7 percent and expert expect it to be increased to 10 percent before the end of the year or in the first months of 2010 it starts to decline.

related story (sgx15385): http://news.yahoo.com/s/nm/20090915/bs_nm/us_creditcards;_yl...

by Silvia Szarkova for PocketNews (http://pocketnews.tv)

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posted by Blog TechSource @ 11:59 PM