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People aren't paying their credit cards

Valued Contributor

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 7
6 REPLIES
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 7
New 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 7
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 7
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: $218,900Utilization: 1%AAoA: 5yrs, 5mthsInstallments: Car Lease, Marcus LoanBaddies: 0On Chop Block: Nobody NA

             
             
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Message 5 of 7
Highlighted
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 7
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: $218,900Utilization: 1%AAoA: 5yrs, 5mthsInstallments: Car Lease, Marcus LoanBaddies: 0On Chop Block: Nobody NA

             
             
                          DSC-27.1K | NFC-25K | ALI-25k | WAL-10k | BoA-22k | BB-12k | NFL-15k | LOW-35k | AMX-19.3k | CHA-10k | PF-8.8k | C-DC-9.7k
Message 7 of 7