Comments on: Credit Card Lenders Clamp Down Hard http://www.nakedcapitalism.com/2008/10/credit-card-lenders-clamp-down-hard.html Sun, 22 Nov 2009 20:29:01 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: GET REAL http://www.nakedcapitalism.com/2008/10/credit-card-lenders-clamp-down-hard.html#comment-23649 GET REAL Wed, 29 Oct 2008 18:43:00 +0000 http://www.nakedcapitalism.com/2008/10/credit-card-lenders-clamp-down-hard/#comment-23649 What came first.. the chicken or the egg.. the loan or the borrower? If loans were ripe low hanging fruit loaded on the banks "trees", but only the credit worthy may pick, they will rot on the limb. Those people were gone years ago. We are a subprime country with subprime corporations and companies built on phony books and balance sheets.. Think about it.. What came first.. the chicken or the egg.. the loan or the borrower? If loans were ripe low hanging fruit loaded on the banks “trees”, but only the credit worthy may pick, they will rot on the limb. Those people were gone years ago. We are a subprime country with subprime corporations and companies built on phony books and balance sheets.. Think about it..

]]> By: fresno dan http://www.nakedcapitalism.com/2008/10/credit-card-lenders-clamp-down-hard.html#comment-23594 fresno dan Wed, 29 Oct 2008 09:26:00 +0000 http://www.nakedcapitalism.com/2008/10/credit-card-lenders-clamp-down-hard/#comment-23594 I don't know if I mentioned it here, but about 2 weeks ago I did my annual visit to the Washington DC (Smithsonian National) Zoo, and their were people outside of the Metro (subway) trying to sign people up for credit cards. I had no interest in that, but now I wish I had found out the company doing this. <br/>BTW, I also get endless solicitations from credit card companies and my Mortgage holder (Wells Fargo) sends me letters practically begging me to take out a HELOC I don’t know if I mentioned it here, but about 2 weeks ago I did my annual visit to the Washington DC (Smithsonian National) Zoo, and their were people outside of the Metro (subway) trying to sign people up for credit cards. I had no interest in that, but now I wish I had found out the company doing this.
BTW, I also get endless solicitations from credit card companies and my Mortgage holder (Wells Fargo) sends me letters practically begging me to take out a HELOC

]]> By: Anonymous http://www.nakedcapitalism.com/2008/10/credit-card-lenders-clamp-down-hard.html#comment-23585 Anonymous Wed, 29 Oct 2008 07:15:00 +0000 http://www.nakedcapitalism.com/2008/10/credit-card-lenders-clamp-down-hard/#comment-23585 Here's another data point for what it's worth. Bank of America has been pushing their 0% balance transfers pretty hard the last couple weeks. 3% upfront, 0% for 15 billing cycles. They can deposit it straight to a checking account, so it doesn't need to pay off other cards.<br/><br/>http://www.bankofamerica.com/creditcards/index.cfm?context_id=marketing_list&category_id=2002<br/><br/>It's a general offer, not a targeted one.<br/><br/>It was the offer on the hold music when I called in and it's the main offer when I log in to check my statement. <br/><br/>The gotcha is that if you miss a payment, the default interest rate is 29% (!!). The other gotcha is that lower interest debt gets paid off first, so if I wanted to use that card again for purchases, those charges would be 'trapped' behind the cash advance at a much higher interest rate.<br/><br/>Still, 3% money is 3% money. It doesn't hurt to have it around. The customer service agent was encouraging me to take up to my credit limit even though I wanted less. <br/><br/>It may just be that they're calculating that the default rates, purchases and 3% up front is worth it to get people to take the money, but personal experience doesn't square up with the nyt article. Take it as another data point.<br/><br/>Check out offers on the link. Here's another data point for what it's worth. Bank of America has been pushing their 0% balance transfers pretty hard the last couple weeks. 3% upfront, 0% for 15 billing cycles. They can deposit it straight to a checking account, so it doesn't need to pay off other cards.

http://www.bankofamerica.com/creditcards/index.cfm?context_id=marketing_list&category_id=2002

It's a general offer, not a targeted one.

It was the offer on the hold music when I called in and it's the main offer when I log in to check my statement.

The gotcha is that if you miss a payment, the default interest rate is 29% (!!). The other gotcha is that lower interest debt gets paid off first, so if I wanted to use that card again for purchases, those charges would be 'trapped' behind the cash advance at a much higher interest rate.

Still, 3% money is 3% money. It doesn't hurt to have it around. The customer service agent was encouraging me to take up to my credit limit even though I wanted less.

It may just be that they're calculating that the default rates, purchases and 3% up front is worth it to get people to take the money, but personal experience doesn't square up with the nyt article. Take it as another data point.

Check out offers on the link.

]]> By: Yves Smith http://www.nakedcapitalism.com/2008/10/credit-card-lenders-clamp-down-hard.html#comment-23579 Yves Smith Wed, 29 Oct 2008 06:42:00 +0000 http://www.nakedcapitalism.com/2008/10/credit-card-lenders-clamp-down-hard/#comment-23579 Anon of 2:36 AM,<br/><br/>Thanks a lot for the McClatchy link. That is a very good news service, and I must admit I don't read it as often as I should<br/><br/>Fair point re smaller amount of debt in aggregate and therefore lower loss potential, but a couple of offsetting considerations:<br/><br/>1. Now that banks are impaired, any additional losses hurt a lot, hence their aggressive curtailment of outstanding credit lines. It is bad enough to get pneumonia, but it is a far more serious ailment when you are trying to recover from a heart attack.<br/><br/>2. This will kill retail spending, further weakening the economy, which will lead to layoffs.....the usual tightening of credit worsens a downturn story.<br/><br/>3. Credit cards are a very important source of borrowing for small businesses. Anon of 2:36 AM,

Thanks a lot for the McClatchy link. That is a very good news service, and I must admit I don’t read it as often as I should

Fair point re smaller amount of debt in aggregate and therefore lower loss potential, but a couple of offsetting considerations:

1. Now that banks are impaired, any additional losses hurt a lot, hence their aggressive curtailment of outstanding credit lines. It is bad enough to get pneumonia, but it is a far more serious ailment when you are trying to recover from a heart attack.

2. This will kill retail spending, further weakening the economy, which will lead to layoffs…..the usual tightening of credit worsens a downturn story.

3. Credit cards are a very important source of borrowing for small businesses.

]]> By: Anonymous http://www.nakedcapitalism.com/2008/10/credit-card-lenders-clamp-down-hard.html#comment-23578 Anonymous Wed, 29 Oct 2008 06:36:00 +0000 http://www.nakedcapitalism.com/2008/10/credit-card-lenders-clamp-down-hard/#comment-23578 The McClatchy article on the same subject is also pretty good.<br/><br/>http://www.mcclatchydc.com/homepage/v-print/story/54880.html<br/><br/>One important point made in this article:<br/> <br/><i>Even so, credit card defaults probably won't wreak as much havoc as mortgage defaults already have, because they're on a much smaller scale.<br/><br/>"This won't be anything like the mortgage crisis," said James Early, an analyst at The Motley Fool. "Simply put, the average person owes a lot more on her house than on her credit cards."<br/><br/>U.S. consumers have less than $1 trillion in outstanding credit-card loans, but more than $10 trillion in outstanding mortgage loans. And the delinquency rate for mortgages is higher than that for credit-cards: 6.41 percent in the second quarter, up from 5.12 percent the year before, according to the Mortgage Bankers Association.</i> The McClatchy article on the same subject is also pretty good.

http://www.mcclatchydc.com/homepage/v-print/story/54880.html

One important point made in this article:

Even so, credit card defaults probably won’t wreak as much havoc as mortgage defaults already have, because they’re on a much smaller scale.

“This won’t be anything like the mortgage crisis,” said James Early, an analyst at The Motley Fool. “Simply put, the average person owes a lot more on her house than on her credit cards.”

U.S. consumers have less than $1 trillion in outstanding credit-card loans, but more than $10 trillion in outstanding mortgage loans. And the delinquency rate for mortgages is higher than that for credit-cards: 6.41 percent in the second quarter, up from 5.12 percent the year before, according to the Mortgage Bankers Association.

]]> By: Kien http://www.nakedcapitalism.com/2008/10/credit-card-lenders-clamp-down-hard.html#comment-23572 Kien Wed, 29 Oct 2008 04:55:00 +0000 http://www.nakedcapitalism.com/2008/10/credit-card-lenders-clamp-down-hard/#comment-23572 If this means I stop getting endless letters from Citibank asking me to take up a credit card, that's one silver lining in the dark cloud. :)<br/><br/>BTW, I saw a videocast of your (Yves) appearance on SBS Australia's Insight. You were wonderful. Hope Insight invites you back in future discussions. If this means I stop getting endless letters from Citibank asking me to take up a credit card, that’s one silver lining in the dark cloud. :)

BTW, I saw a videocast of your (Yves) appearance on SBS Australia’s Insight. You were wonderful. Hope Insight invites you back in future discussions.

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