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Senior Contributor
drkaje
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Registered: ‎07-25-2008
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Re: Not Good - Consumer agency backs down on card fees

@ wh,

 

I'm not gonna bite. :smileyhappy:


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stan_the_man
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Registered: ‎06-29-2010
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Re: Not Good - Consumer agency backs down on card fees


Revelate wrote:

95+75=170.

 

So if 30% of their people basically run up $300 and then don't pay it, that may well be reasonable.  At their strata, they're extending credit to some folks who do exactly that... and I know for one subprime lender I worked at, 30% default rate was a fact of life at one point.


It's actually worse! First Premier's charge off rate is 40%:

 

http://www.argusleader.com/assets/pdf/DF177153721.PDF

 

(see page 9)

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stan_the_man
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Re: Not Good - Consumer agency backs down on card fees


pipeguy wrote:

Revelate wrote:

95+75=170.

 

So if 30% of their people basically run up $300 and then don't pay it, that may well be reasonable.  At their strata, they're extending credit to some folks who do exactly that... and I know for one subprime lender I worked at, 30% default rate was a fact of life at one point.


Perhaps in that one case, however national default rates (MC/V/AE & Disc) including major sub-prime lender Capital One, are running less than 3% and no more than 5% for the 4th Qtr of 2011 and 1st Qtr of 2012 - nowhere near 30%. First Premier actually reined in their up front charges, they used to be much higher where a $300 CL had maybe $50 to $75 available credit after up front fees plus no grace period on 36% or more APR interest. I don't care how high the expected default rate is, that's just plain Mod Cut of their captive customer base.  


Capitol One may serve sup-prime borrowers, but that is not their only customer base like First Premier -- so comparing their default rates is not exactly apples to apples. Also, it appears that you are quote a monthly default rate (I wish I knew how to annualize it):

 

http://www.trefis.com/stock/cof/articles/106339/credit-card-default-rates-rise-in-january-for-capita...

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drkaje
Posts: 3,492
Registered: ‎07-25-2008
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Re: Not Good - Consumer agency backs down on card fees

Not that knowing would improve my life, but it would be interesting to know what the default rate is by credit score. I never trust numbers like that until getting some idea as to how they were arrived at.


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