Credit Cards too?
Here’s a new one…Credit Card companies in the US have managed so far to stay out of the news on the Sub-Prime bebacle but as we all know you can run but you can’t hide. Seems like many hundreds of millions of dollars in sub-prime credit card debt was also packaged and sold off as investment grade debt!
The data for October has just been released, and debts over 30 days in arrears has risen 26%, debts over 90 days in arrears has risen an alarmingly 50%, and finally debts that have become unrecoverable, meaning the bank has given up on collectin, rose 18% to $961 million!!
Turns out all those sub-prime mortgage holders that were sold these dangerous mortgage products also picked up a credit card.
I can imagine the scene now…
Picture when Mr. sketchy credit came home one day and said “Honey, you won’t believe this, I just re-mortgaged the house to 100% of it’s value, which means we were able to pull-out $50,000 in cash, and to top it off they also gave us a $10,000 credit card with no questions asked!! Let’s go buy a new car, those new appliances you wanted, and let’s go on that big trip we have always wanted, we can put it on our credit card. The best part of all is that our payments will actually drop because we get this really low rate right now. Jimmy the crooked mortgage broker told us that in two years we can do it all over again, and keep staying at these low rates, isn’t it great?”
This is really sad, and honestly I feel for those people. They were sold a bill of goods that was not good, and now good people are losing their homes. Sad, really sad.
