Credit card losses climb with jobless rate in Aug

Source: Reuters

NEW YORK (Reuters) - A weak U.S. labor market led to bigger bank writedowns of credit card debt in August as a record-high jobless rate left consumers struggling to pay their bills.
Charge-offs, or the writedown of uncollectible debt by banks, increased 81 basis points to 10.62 percent in August, after a 31 basis points decline to 9.81 percent in July. On the retail front, credit card writedowns increased 49 basis points to 9.99 percent in August, according to JPMorgan Securities.

Citibank posted the biggest credit card losses in August, with charge-offs climbing to 12.14 percent from July's 10.03 percent, it said.

On a positive note, however, American Express, Capital One and National City posted lower charge-off rates in August with declines of 44 basis points, 20 basis points and 24 basis points, respectively, versus the prior month.

Losses in securities backed by credit cards generally track increases in the unemployment rate. The jobless rate hit a 26-year high at 9.7 percent in August.

JPMorgan expects to see further credit card ABS deterioration given the still weakening labor market and projects charge-offs will reach an 11 to 12 percent range as unemployment climbs above 10 percent in 2010.


Read more: http://www.reuters.com/article/ousivMolt/idUSTRE58F42320090916

c.c. companies revising their 'target' audiences because of the high default rates . . . I wonder if it occurs to them that jacking up interests rates on existing debt to levels that would make a medieval moneylender cringe is one reason more and more people who are struggling to pay their bills are throwing their hands up in the air and saying "f**k it - why bother paying when less than a dollar goes to principal?"

The companies would probably see a bigger 'profit' if they cut their interests rates to single digits - at least people would feel like they had a chance of getting out from under the debt and make payments, rather than just walking away from it.

now....greedy pigs NEVER seem to pay attention to the ACTUAL happenings around them...they have this "virtual" world that they live in and twist things to fit their "world"...and then one day - boom - things don't work and they wonder why.

Ponies for everyone! Whee!

I'm sure Corporate America is shocked at this finding.