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Credit-Card Debt Nears $1 Trillion as Banks Push Plastic

wsj.com

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Re: Credit-Card Debt Nears $1 Trillion as Banks Push Plastic

#201

Post by nly »

maxxxxx wrote: post #184
maxerickson wrote: post #177

Earlier quoted context omitted.

It's not entirely arbitrary. It has to cover the interest for the payment period and some portion of the principle balance. Only paying the minimum will certainly result in paying a large amount of interest.

The "some portion" part is certainly arbitrary. In any case, it's named in a way that people feel safe but they absolutely aren't.

Well the idea is people don't pay off the principle fast enough not to end up maxing out their cards. Then they just apply for new ones. This is why people are in hock for life.

Then come the vultures. Consolidation loans, payday loans, etc.

Re: Credit-Card Debt Nears $1 Trillion as Banks Push Plastic

#202

Post by prostoalex »

winslow wrote: post #80
prostoalex wrote: post #57

Earlier quoted context omitted.

That is correct, the total outstanding debt was down as of year ago (side benefit of lower gas prices leaving more cash in the pockets of consumers), but the article mentions the banks have revved up their credit card distribution since then: "Because many creditworthy consumers are still cautious about spending, lenders are turning more aggressively to subprime borrowers. Lenders issued some 10.6 million general-pur…

So we are back at the subprime lending model. Correct me if I am wrong but from my understanding this is what ultimately caused (or one of the biggest factors along with adjustable rate mortgages) the housing collapse and economic downturn circa 2007/2008. So how is this subprime lending any different via the credit cards? We could hypothesize that credit card debt won't be as massive as mortgage debt and thus may no…

As long as credit card debt is rated properly, its acquirers know exactly what they're signing up for, and at certain point will exhaust the resources they're ready to pour into junk-level securities (or at least be somewhat contained by the public's appetite for junk).

The subprime mortgages propelled into the prime markets only after a major insurer with a strong balance sheet announced that they will make their investors whole in an [unlikely] event of a default, which led to ratings' agencies decision to assign the AAA rating.

Without AAA, such securities are relegated to their own little corner of the market, which sooner or later faces capital constraints.

Re: Credit-Card Debt Nears $1 Trillion as Banks Push Plastic

#203

Post by mac01021 »

toomuchtodo wrote: post #112
damptowel wrote: post #98

Earlier quoted context omitted.

Governments have been running deficits for 5000 years, it's how currency is established.

US citizens are binging on credit to make up for stagnant wages. That's not a theory, that's a fact. First it was housing, now its credit card and auto loan debt. Fun fact: Subprime auto loan bonds are in a slow motion trainwreck: http://money.cnn.com/2016/03/15/investing/subprime-unpaid-au... http://www.bloomberg.com/news/articles/2016-03-21/this-is-wh...

You're asserting that, if wages were not stagnant, people would not binge on credit? Maybe that's true, but I doubt it's noncontroversial enough to be declared "fact rather than theory".

Re: Credit-Card Debt Nears $1 Trillion as Banks Push Plastic

#204

Post by mac01021 »

dionidium wrote: post #120
JonFish85 wrote: post #91

Earlier quoted context omitted.

Credit card debt probably isn't the "earliest" signal of that. We've been running pretty solid federal deficits for going on 40 years now -- that's probably a good indication that people feel that they deserve more than they pay for.

Analogies from federal budgets to household ones are specious at best

Why? In both cases a deficit imposes a burden on our future selves or our descendants.

Re: Credit-Card Debt Nears $1 Trillion as Banks Push Plastic

#205

Post by cloudjacker »

joslin01 wrote: post #182
cloudjacker wrote: post #168

Earlier quoted context omitted.

The only thing you didn't admit to learning is what household income really means. You aren't married so you lied about income as household would only equal you. This is going to be a problem for you in bankruptcy court.

Do you feel good about yourself now? FWIW: This story is not a present tale but one that happened to me. I'm shrewd enough to see my way out of foolishness -- a quality you spare me in your claim that I'll be in bankruptancy court.

Bankruptcy is a shrewd way out of the foolishness. Nobody made any moral stance, attempting to discharge debt is equally as amoral as paying it off.

Re: Credit-Card Debt Nears $1 Trillion as Banks Push Plastic

#206

Post by mac01021 »

morgante wrote: post #193
hyperpape wrote: post #13

Earlier quoted context omitted.

Given that this is > $12,000 for a family of four, I'm guessing that it's not that much less, and at least half of it is carried over month to month, if not more.

Why do you assume that? I'm single but will sometimes have a debt of $10k in a month but never carry any over.

Impressive income.

Re: Credit-Card Debt Nears $1 Trillion as Banks Push Plastic

#207

Post by ArkyBeagle »

DINKDINK wrote: post #104
abarringer wrote: post #21

Earlier quoted context omitted.

Your feelings are way off. Most credit card debt is not paid off every month. Not by a very very long shot. Average credit card debt per U.S. adult, excluding zero-balance cards and store cards: $5,232.43 Average debt per credit card that usually carries a balance: $7,494.44 Average number of cards held by cardholders - bankcards: 2.24 Average debt per credit card that doesn't usually carry a balance: $1,128.44 http:…

Ignore these statistics, they're reporting average debt of credit cards. The level of debt per card is not an independent variable. You need to be reporting median debt.

Deeply ignorant question: Is this not of the sort of distribution where those are related, somehow?

Re: Credit-Card Debt Nears $1 Trillion as Banks Push Plastic

#208

Post by ArkyBeagle »

nostrebored wrote: post #113
conception wrote: post #89

Earlier quoted context omitted.

Thanks for this. Was about to go nuts about how useless an average is on this sort of thing.

Well the median is an average so... And honestly both averages should be presented together, paints a terrifying picture

Median != mean. Usually, "average" is expected value, or mean.

Re: Credit-Card Debt Nears $1 Trillion as Banks Push Plastic

#209

Post by ArkyBeagle »

damptowel wrote: post #102
throwawaykeno wrote: post #60

Earlier quoted context omitted.

> Average credit card debt per U.S. adult, excluding zero-balance cards and store cards: $5,232.43 That is amazing and terrifying.

And its only the tip of the iceberg, read Richard Vague or Steve Keen. Global private sector debt is at historic record levels. It's the sole reason the economy stays sour.

But still, no inflation for us. Nope.

Re: Credit-Card Debt Nears $1 Trillion as Banks Push Plastic

#210

Post by ArkyBeagle »

toomuchtodo wrote: post #138
nametakenobv wrote: post #131

Earlier quoted context omitted.

If they have their CCs maxed out for clothes and bar tabs, of course that's gonna be the case.

Do you truly believe half of Americans are maxing out their credit cards on bar tabs and clothing? Does that make sense when the majority of bankruptcies are from medical debt?

No, it's mostly just not allowing for relatively small bumps in the road. A water heater here, a transmission there, next thing you know...
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