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JPMorgan warns on credit card woes
JPMorgan warns on credit card woes
"At the end of the first quarter, 12.63 per cent of the WaMu credit card loans were deemed uncollectable by JPMorgan. The bank estimates that figure could reach 18 to 24 per cent by the end of 2009, depending on economic conditions."
The Chase credit card loan portfolio isn't doing so hot either -- especially in Arizona, California, Florida, Nevada and Virginia
This is why credit card interest rates are so high -- to compensate for all the deadbeats.
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Why not look at it from the perspective of those who have lost their jobs and can no longer pay any of their bills.
The banks that issue the cards get, a loan in the form of a handout to the banks.
But the people get a finger.
The banks issuing the cards raise the rates on the cards in order to pay back the loans they took in the form of a bailout. The Banks, credit card divisions can be profitable, through volume, not by raising prices or rates, and then expect to right off the losses at tax time because of chinagens.
The Peoples Government, as In WE THE PEOPLE, and NOT the government of the Corporation; should have given the money directly to the people, only if they would have paid off the credit cards and closing any accounts.
The credit card divisions of these banks would have been solvent and they could have bought the bank stocks instead of making the Taxpayer support the banks losses.
Eliminating any need to label the people as deadbeats. When in fact it was the financial industry that killed the goose that laid they're golden eggs.
The only deadbeat, is the victim has no pulse. The credit card holders are the victim and are as good as dead.
When the dust settles it's easy to see what will happen. The well healed will get good rates at the expense of those who struggled in this time period. Another gift or transfer of wealth to the Well off. A subsidized system for the Rich. They'll get rates at 3% because the poor will have to pay 18%.
May 28, 2009 3:24 PM | Reply | Permalink
Even if there was no bailout, the banks would still be raising rates through the roof. And they would still be cancelling completely some people's accounts. They'd still be charging obscene rates because so many people are late on payments. And Congress enacting caps on rates will just make it worse. The banks will cancel more people's accounts, and not just the deadbeats but also the people who pay in full every month.
May 28, 2009 8:49 PM | Reply | Permalink
"This is why credit card interest rates are so high -- to compensate for all the deadbeats."
That might be JPM's self-serving point of view. But raising rates a lot creates more deadbeats. Lowering rates creates fewer deadbeats as long as credit policies remain tight. It's as if JPM were a dairy farm and the cows not producing enough milk to cover the costs due to udder inflammation -- milking them harder aggravates the problem.
Another problem is that only JPM has WaMu/Chase obligations, so if it raises rates, its customers can move to some other lender with lower rates or other better benefits. Those with good credit ratings and good payment histories simply move away leaving the lender in even worse shape. If there is a cartel, that problem should be immediately attacked via DOJ.
May 28, 2009 3:43 PM | Reply | Permalink
Good Illustration and points EDS
How many options will be avaiable if the biggest banks consolidate, which appeared to be the objective.
May 28, 2009 3:56 PM | Reply | Permalink
Well, first of all there are a very limited number of national card names, VISA, MC, Discover,... but people can choose to open accounts at smaller banks, with or without deposit or checking account. There might be rate or fee differences etc. and preferred card status (Gold or Platinum etc.) might not be readily available.
There has already been consolidation of course, that's part of the point of JPM+Chase+WaMu. And Chase had bought up other CC companies before that (incl one of mine in the past year or so).
I don't know how to quantify the "pressure" that consolidation effects in such matters. But I'm a "deadbeat" in Donal's sense that I don't carry a balance, so rates don't affect me directly.
May 28, 2009 5:55 PM | Reply | Permalink
Either way, it's JPM's interpretation of the situation that prompted them to triple my interest rate on a card that has: a) never been late, b) never reached its limit, c) often paid in full and d) been open and in use for over five years.
When I called to have the rate re-lowered I was told, "we actually haven't reviewed your particular file as part of the transition of the WaMu portfolio. These rate hikes are across the board."
So, it doesn't matter - deadbeats or bad business, I'm now paying through the nose for doing nothing wrong. What a load of BS.
May 29, 2009 11:14 AM | Reply | Permalink
My rate would be 9.24%, now, if I had a balance (JPM subsidiary).
What was your rate before, 3%??
Have you tried getting an account elsewhere?
May 29, 2009 8:23 PM | Reply | Permalink
Ironically, in credit industry parlance, "deadbeats" are those who pay their full balance every month.
May 28, 2009 4:55 PM | Reply | Permalink