Some alarming reports about credit card delinquencies on the rise in the US, and the banks are oblivious to the problem and are trying to make money out of it. Which can only end badly.
The Wall Street Journal reports that major credit card companies are reporting that there has been a rise in late payments.
According to Eileen Connolly at Associated Press, it's the first month since February 2009 that so many major companies reported upticks in payments late by 30 days or more and it is worrisome that more people appear to be falling behind, especially with unemployment remaining above 9 percent. That's why some economists predict another US recession.
What's even more alarming is the report in The Wall Street Journal that banks issued 5.4 million new credit cards to sub-prime borrows through June, people with less-than-pristine credit. That's up a whopping 64 per cent from a year before.
In other words, credit card companies are doing business with borrowers with lower credit quality because they are desperate to boost revenues and remain competitive. These borrowers will struggle to repay. For the banks and credit card companies, it spells disaster.
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