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People aren't paying their credit cards

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People aren't paying their credit cards

People aren't paying their credit cards and more accounts are being shut down, and it could be a sig...

 

Rejection rates for credit-card applicants came in at 20.8% in the October survey, up from 14.4% a year ago, while the rejection rate for credit-limit increases ticked up to 31.7%, compared with 24.9% a year ago.


















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Message 1 of 15
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Frequent Contributor

Re: People aren't paying their credit cards

The storm's coming.  This bull market can't last forever.  I've started thinking about what steps I can take to avoid issues in case of a downturn.  If CC issuers start taking more preemptive adverse action I want to not have a figurative target on my back.  

Message 2 of 15
Super Contributor

Re: People aren't paying their credit cards

Yeah I read that this morning. 

 

I think we are going to see a lot of Sync and Comenity tightening for sure. 


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Message 3 of 15
Senior Contributor

Re: People aren't paying their credit cards

I just read this article seems lenders are getting skittish and the Fed wants to know why considering current low-interest rates (not those lenders charge) and actually low default numbers. Strange how most credit cards charge 18% to 25% apr (store cards are even higher) when they borrow funds at 2.25% and sell their accounts receivables at 10% to 15% yet possible future "defaults" seem to be a concern.  

 

Barclays being proactive in closing "good accounts" comes to mind, glad I closed all those accounts.

Message 4 of 15
Valued Contributor

Re: People aren't paying their credit cards

I have seen several articles similar to this in recent months. Not much we can all do except make sure we have all of our profiles in order the best we can, so that we can withstand any possible changes that could come.
                               

Total Credit: $240,100Credit Utilization: 1%AAoA: 5 years, 7 monthsInstallments: Car Lease, Marcus LoanNegatives: 0

LOWES-35k | BOA-32.5k | AMEX-30k | DISC-27.1k | ALLIANT-25k | NFCU-25k | BARC-15k | BBUY-12k | CHASE-10k | WAL-10k | CITI-9.7k | PENFED-9.7k


Message 5 of 15
Moderator Emeritus

Re: People aren't paying their credit cards

Hrm.

 

There was an upswing like this a year ago too with the Syncrhony / Cap 1 numbers as I recall, and I saw it even earlier than that in my Lending Tree data (where my defaults turned supiciously high).

 

The stats are the stats, but rejections are not the same as defaults which is where people aren't paying their bills rather than just floating more debt (like I am, I know I know something could happen but short of act of God it won't this month); actually, with the rise of credit card information being floated online, I suspect there are even more applications and CLI requests being submitted than ever before and potentially not by as qualified borrowers... without the underwriting information it's hard to say, but my file isn't pretty anymore but a CU just handed me a 20k check from a personal loan, so I don't think we're that tight right now.

 

I'm waiting on other economic data before I think the sky is falling even as my own debts are still racking up unfortunately... but the income flow should be landing starting next Friday, so at least my personal situation will get better and admittedly I'm not in a place where I'm going to default.




        
Message 6 of 15
Valued Contributor

Re: People aren't paying their credit cards


@Revelate wrote:

Hrm.

 

There was an upswing like this a year ago too with the Syncrhony / Cap 1 numbers as I recall, and I saw it even earlier than that in my Lending Tree data (where my defaults turned supiciously high).

 

The stats are the stats, but rejections are not the same as defaults which is where people aren't paying their bills rather than just floating more debt (like I am, I know I know something could happen but short of act of God it won't this month); actually, with the rise of credit card information being floated online, I suspect there are even more applications and CLI requests being submitted than ever before and potentially not by as qualified borrowers... without the underwriting information it's hard to say, but my file isn't pretty anymore but a CU just handed me a 20k check from a personal loan, so I don't think we're that tight right now.

 

I'm waiting on other economic data before I think the sky is falling even as my own debts are still racking up unfortunately... but the income flow should be landing starting next Friday, so at least my personal situation will get better and admittedly I'm not in a place where I'm going to default.


Revelate, good way to look at it.  No sense in getting all worked up until there is a definitive reason to be.  

                               

Total Credit: $240,100Credit Utilization: 1%AAoA: 5 years, 7 monthsInstallments: Car Lease, Marcus LoanNegatives: 0

LOWES-35k | BOA-32.5k | AMEX-30k | DISC-27.1k | ALLIANT-25k | NFCU-25k | BARC-15k | BBUY-12k | CHASE-10k | WAL-10k | CITI-9.7k | PENFED-9.7k


Message 7 of 15
Frequent Contributor

Re: People aren't paying their credit cards


@cincydavid wrote:

The storm's coming.  This bull market can't last forever.  I've started thinking about what steps I can take to avoid issues in case of a downturn.  If CC issuers start taking more preemptive adverse action I want to not have a figurative target on my back.  


 

The economy has had lingering issues for a while. It's just been masked pretty well over the last few years.

 

One of the easiest metrics to tell that the economy is hurting, is the plethora of meal-deals at restaurants, and the noticeably rather stark lack of patrons. It's been pretty obvious to me that the economy wasn't doing all that well, because very few restaurants are doing well, outside of say, McDonalds, which is like the cheapest restaurant of all time, especially now. How they can still charge 1-dollar for items, with today's inflation, and still give away things for free, is a total misnomer.

 

As far as the employment being low, that is a Pyrrhic statistic. Obviously, the only way everyone can be working, and simultaneously still have no money... is if they aren't receiving a living wage. I think a lot of the recession holdouts just got over their pride and took jobs that pay slightly more than peanuts - to tide themselves by. For a while there, a lot of the educated workforce (that had been out of work) had simply refused to work for peanuts... refusing to accept the reality, that some of their good jobs just weren't ever coming back. So, now people are just hunkering down and doubling up on shifts... just to barely skate by.

 

So, sure... we're just about at full employment now, with a lot of sad sacks, working (oftentimes multiple) jobs that they're well overqualified for... and they don't even have enough money left over to go out on weekends. Then we have an utter lack of foresight on the part of public policy; whereas, we could have gotten well out in front of this, by subsidizing education tailored in all of the new technology, infrastructure, and energy industries. Alas, we don't have the requisite forethought in public policy; so instead we just have a dreary, dreadful state of affairs... with only one clear end in sight. (another recession)

Message 8 of 15
Moderator Emeritus

Re: People aren't paying their credit cards

 

Do you honestly think that recessions are avoidable through public policy?

 

Show me any society that hasn't experienced a recession since the dawn of industrialization, or otherwise prove on a macroeconomic basis that recessesions are avoidable as a result of public policy.

 

Pretty sure no one else can do that either FWIW.

 

I'm really not sure that using restaurants as a benchmark is a good idea anymore though I dispute your comment that restaurants aren't being frequented all over: there's plenty of crowds where I live in restaurants and not just in fast food either.  Ultimately restaurants may not survive, just too expensive and cultural changes trending towards "clean eating" pretty much don't include restaurants.  Home Chef and the other do-it-yourself services are trending towards $10/plate, that basically in line with a Big Mac Extra Value Meal now and I don't think anyone is going to try to debate food quality on that one, really those services are at the $15-20 per plate in restaurants now.  That's not a long intellectual walk, as soon as I'm out of either of my two jobs, I'm learning how to cook.  I may even try to do one night a week now to attempt a sustainable transition.

 

Holiday spending beat expectations even by like 20% and economists were already expecting new records anyway.  

 

We can debate what the numbers actually mean, but there's absolutely some basis in reality for them.  Companies were hiring for white collar jobs in December rather than waiting till January as is traditional.  That's a big change, and we're not talking on the low-end of the wage scale either.

 

 

I will agree as a society we do a pretty bad job at retraining workers; however, there's got to be some responsibility on the individuals too.  Ultimately the expectation of having one career your entire life is flawed, industries come and go and even evolutions of those industries may marginalize your own career.  I know mine is coming to an end sometime in the next two decades, and probably a lot sooner than that.  So I'm doing some retraining now, while working two jobs and squirrling money away, and if I hit a wall there's always a fallback plan: namely, one year in Texas working any stupid job I can get (there will probably be something, or just live super cheap while studying a bunch of Physics books), claim the 10 year get out of educational jail free card at Texas A&M, and then go do something else with my life.

 

Admittedly I don't have a lot of things going on in my life so I can pick up and do that, but there is a market solution, just have to be willing to take it.




        
Message 9 of 15
Frequent Contributor

Re: People aren't paying their credit cards


@Revelate wrote:

 

Do you honestly think that recessions are avoidable through public policy?

 

Show me any society that hasn't experienced a recession since the dawn of industrialization, or otherwise prove on a macroeconomic basis that recessesions are avoidable as a result of public policy.

 

Pretty sure no one else can do that either FWIW.

 

I'm really not sure that using restaurants as a benchmark is a good idea anymore though I dispute your comment that restaurants aren't being frequented all over: there's plenty of crowds where I live in restaurants and not just in fast food either.  Ultimately restaurants may not survive, just too expensive and cultural changes trending towards "clean eating" pretty much don't include restaurants.  Home Chef and the other do-it-yourself services are trending towards $10/plate, that basically in line with a Big Mac Extra Value Meal now and I don't think anyone is going to try to debate food quality on that one, really those services are at the $15-20 per plate in restaurants now.  That's not a long intellectual walk, as soon as I'm out of either of my two jobs, I'm learning how to cook.  I may even try to do one night a week now to attempt a sustainable transition.

 

Holiday spending beat expectations even by like 20% and economists were already expecting new records anyway.  

 

We can debate what the numbers actually mean, but there's absolutely some basis in reality for them.  Companies were hiring for white collar jobs in December rather than waiting till January as is traditional.  That's a big change, and we're not talking on the low-end of the wage scale either.

 

 

I will agree as a society we do a pretty bad job at retraining workers; however, there's got to be some responsibility on the individuals too.  Ultimately the expectation of having one career your entire life is flawed, industries come and go and even evolutions of those industries may marginalize your own career.  I know mine is coming to an end sometime in the next two decades, and probably a lot sooner than that.  So I'm doing some retraining now, while working two jobs and squirrling money away, and if I hit a wall there's always a fallback plan: namely, one year in Texas working any stupid job I can get (there will probably be something, or just live super cheap while studying a bunch of Physics books), claim the 10 year get out of educational jail free card at Texas A&M, and then go do something else with my life.

 

Admittedly I don't have a lot of things going on in my life so I can pick up and do that, but there is a market solution, just have to be willing to take it.


 

The, "market solution," to the entire economy - is based on what? Who takes and chooses it? You, me, some fat cat smoking on a cigar? It's a misnomer. There is no there - there. It's just hoping that someone else with a lot of money - that conveniently doesn't pay anywhere near their own fair share of taxes - just happens to do the right thing by everyone else, and put money into things that give the rest of society purpose. Where are the metrics for this? As far anyone can tell, the wealthy just hoard, full stop.
 
The other question is, Are recessions inevitable? Well sure... under a system that serves as little more than an economic ponzi scheme; with permanent inflation, and quantitative easing.
 
Conversely, of course public policy could conceivably invest in educating the workforce to do the jobs of the future. The fact that society doesn't think forward - is not itself inevitable. It's based on a massive propaganda campaign (the one thing that the wealthy do invest in) that convinces the average citizen that they don't need society, and that they should just pick themselves up by their own boot straps. As a result, society is getting a raw deal; wages are non-living, infrastructure is failing, public security is failing, retirement is failing, health systems are failing, and on and on. Worse yet, a lot of people have been falsely convinced that it's impossible to improve the situation.
 
Finally, the worse part, is that the public service sector manages to run at a massive loss to society, without actually providing meaningful services to all of society. As a business, it needs to go bankrupt, and be start over... with a vastly different revenue strategy. Revenues need to be accounted for properly -- and invested in people; education, jobs, and the future.
 
Also, if restaurants are doing well in your area, and not in mine... it just means that you are located in a pocket that is masking the overall health of the economy. It doesn't disprove the chinks in the armor. Further, I'd like to see some references to the rather glowing numbers that you're posting.
 
Here's an interesting take on recessions:
https://www.investopedia.com/ask/answers/032015/are-economic-recessions-inevitable.asp

Message 10 of 15
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