Credit cards – starting to show signs of strain – US
Courtesy of Trey with the potentially prescient title, of Sub-Prime 2.0, he highlights this Fortune article on Yahoo, reflecting the UK experience with their home price crash two years ago, and supplemented by observations from North American Card companies. The upshot is that we will see a significant jump in credit card defaults over the next 1 – 2 years.
The $915 Billion Bomb in Consumers’ Wallets
Citi said the change in loan losses was “inherent in the portfolio but not yet visible in delinquencies.” Then American Express said that it too was seeing “signs of stress” and would boost its loss reserves in its core U.S. card unit by 44%. Capital One, Bank of America, and Washington Mutual all said they are bracing for a 20% or higher increase in credit card losses over the near and medium term.
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