Is Credit Card Debt Ready To Explode?

From the Baltimore Sun comes this interesting tidbit about credit card debt and how banks have eased their lending standards to be able to grab a bigger share of the credit card market, which the article says is “banker-ese for “making lots of loans that won’t get paid back.””:

After every financial crisis over the past 10 years, the Federal Reserve has cut interest rates and pumped money into the economy. Each rescue solved the problem – and created a new one. The next bomb from this chain reaction of bailouts and blowups will be credit-card debt. Hardly anybody is talking about it yet, but banks and consumers are laying the ground for a wave of credit-card defaults, bankruptcies and asset write-offs for 2009 or so.

So with 1 in 10 people already headed into foreclosure on their houses, are credit cards the next big wave in “Sorry, I cannot pay you back”?

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Comments (5)

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  1. Patrick says:

    Hmmm… The greed never ends, does it? It is a never ending cycle – if the credit companies tightened up their loan requirements, there would be fewer default payments, but also much less profit. In the end they decide to raise the interest rates and fees they charge and write off the deadbeats as a loss (and probably deduct that from their profits.)

  2. I just vented about this recently on my Banks.com cc blog. All the lender are bloodsuckers. Ugh, this is frustrating. Will they never learn? I think I’m going to link to this post on my blog today because the topic deserves a follow-up for sure.

  3. MoneyNing says:

    I’m sure one day it will be a major problem but hopefully it’s not as early as 2009!

  4. Bo says:

    To be honest, I am not quite sure how the CC industry hasn’t reached that point already.