Credit cards = subprime 2.0?
Posted by Trey Reeme on November 5th, 2007
I’m already bracing for the “Donny, you’re out of your element” comments that I usually get when posting on matters of the economy.
Fire away, haters.
From a Yahoo! Finance article called The $915 billion bomb in consumers’ wallets -
If there is an international precedent the U.S. should be watching, it’s actually that of the U.K. British consumers are just as overstretched as Americans, but since the real estate market there rose faster and fell earlier, they’re about 18 months ahead in the credit cycle. Since the last quarter of 2005, credit card delinquencies and charge-off rates in Britain have risen as much as 50%, forcing banks to take huge write-offs.
It’s a sign of the times that, according to one survey last month, 6% of British homeowners have been using their credit cards to pay their mortgages. That’s suicidal, of course, given that credit card interest rates are more than double even the heftiest mortgage. Keep your fingers crossed that it’s not a trend that crosses the Atlantic.
Wow, I can’t believe the pummeling you’re taking here. I feel like cutting up my credit cards and throwing the little plastic pieces at you, Trey.
Careful where you throw those things William…there’s a beverage here man.
This would be a horrible idea for consumers to get into their heads – to pay their mortgage with their credit card – and perhaps one we should encourage CUs across the country to write about (for the public audience) so that trend doesn’t take off here!
The silver lining: After some pain, some gain.
http://www.banking-business-review.com/article_news.asp?guid=A0098D9E-6252-4045-A9D2-E99ABD3F07C0
I appreciate the Big Lebowski reference