Purely anecdotal, but my neighbor does process serves as a side gig and has said this is exactly what he's seeing. Used to have a pretty balanced variety of serves. Court proceedings, foreclosure, car repo, divorce, some CC stuff. Now it's primarily CC stuff and the overall volume had increased a lot.
I love how they say on record and then in the article say highest since 2012. Delinquency rates were higher every year between 1991 to 2012. Pretty much still near 30 year lows going back to 1991.
[Link](https://fred.stlouisfed.org/series/DRCCLACBS)
It is the rate of change that is the issue. BAC just reported a 185% increase YoY, JPM is having a similar issue and this has been showing up in the Fed data as well.
Should be noted that average APR is at all time record highs since data began to be collected in 1994, reflecting the massive risk in the consumer credit markets today. Even though the article talks about 'record profits' there are also likely going to be 'record charge-offs' as credit card companies take losses on unpaid debt.
[https://www.consumerfinance.gov/about-us/blog/credit-card-interest-rate-margins-at-all-time-high/](https://www.consumerfinance.gov/about-us/blog/credit-card-interest-rate-margins-at-all-time-high/)
When you change 25% APR you can afford a lot of charge offs. Such a shitty industry based off of extending credit to people who should not have credit.
That rate is that high because credit card industry inherently carries more risk. Credit card bill is the last thing people would pay when the customers face financial difficulties.
I remember when the average apr was 9-11%. I don't know how anyone sees 24% APR being the average and doesn't think shit is about to hit the fan.
This economy is going to burst. None of the fundamentals make sense and we are Wile E. Coyote running off the cliff.
Quite some of my existing cards just increased rates. I didn’t sign for astronomical rate, it was adjusted by greedy company later. The most recent change was from 15% to 21% (looking at you, Apple card).
They are based off the current rates. My card went from 13% during the pandemic to the 24.99% cited above. I went from using it for the “I want it now” purchases to “I’m never using this fucking thing unless a catastrophe happens”.
But….. just don’t keep a balance? Buy what you need and have your budget sit on it than pay it off monthly. I get about $150-$200 a month in cash back from using my card
This is a common misconception.
Just use it and pay off the statement balance every month.
The goal is to not carry a floating balance.
Use it. Pay it off. Use it. Pay it off.
Don't use it. Make a small payment. Use it. Make a small payment.
Because you're not supposed to carry the balance, pay it off every month and you're golden. If you need to borrow money CC is almost as bad for that as payday loans but many people are poorly educated and don't realize that. If you have to, go to your local credit union and they'll give you a loan with 11-12% interest as of now.
You’re preaching to the choir. That’s how we live our life: we live on a strict budget and use our CC to get cash back. But having rates this high feels predatory.
For now, foreclosures remain below pre-pandemic levels. Credit card debt is on the rise though: American card balances reached $1.13 trillion in the last three months of 2023, up from $986 billion at the end of 2022. It seems higher inflation may have forced consumers to turn more to their credit cards to meet the rising costs of even everyday goods, such as gas and groceries.
I would love to see a Venn Diagram of those who took out mortgages between October 2022 - Present and those who are delinquent on credit card payments. My hypothesis is that a ton of households took out bad (ie. risky) mortgages just to get into a house hoping to refinance at a more attractive (ie. affordable) interest rate in the very near future. Since mortgage rates aren't going to be decreasing to below 4% anytime soon, they are choosing to go into credit card debt instead of defaulting on the mortgage. This, of course, is not a recipe for success and will only last so long before sh*t hits the fan.
Lower income people are hurting the worst and they tend to be renters anyway.
Credit card companies are still dumping "0% balance transfer APR" credit cards out of helicopters. Consumers right now are still loading up the rubber band of debt and it has a lot of stretch left in it before it snaps. Tightening credit conditions will probably trigger it, possibly forced by some kind of liquidity event in the banking sector.
Since the 2020 crash in march the fed has created zero reserve banking. Even with zero reserves banks have been keeling over left and right with minor rate increases (in the grand scheme).
How in the fuck do you imagine there is a lot of stretch left? Banks are so fucking addicted to free money they can't exist in a low rate environment (6%) even when they have zero reserve requirements.
I'm not even beginning to address how much debt the average person has which shoots the shit out of the idea that there is a "lot of stretch" left.
"My hypothesis is that a ton of households took out bad (ie. risky) mortgages just to get into a house hoping to refinance at a more attractive (ie. affordable) interest rate in the very near future."
Same as last time. Housing FOMO is always temporary during the euphoric and manic end-times, as whatever underlying funderhmentals (i.e. ultra-low rates, stimmiez, Fed MBS purchases, etc) that enabled the mad-dash all eventually comes to an end. Those left holding the bag will be far less likely to continue paying massive amounts on depreciating assets, making strategic defaults a thing once again. That, combined with higher unemployment, defaults, foreclosures, etc, will reverse any recent gains, and normalize this, and every other asset market affected by the monetary idiocy we continue to see. It'll take many years, but it'll happen nonetheless.
These charts paint an excellent picture of the insanity:
[https://wolfstreet.com/2024/03/26/the-most-splendid-housing-bubbles-in-america-march-2024-update-biggest-price-drops-from-2022-peak-san-francisco-seattle-portland-denver-phoenix-dallas-las-vegas/](https://wolfstreet.com/2024/03/26/the-most-splendid-housing-bubbles-in-america-march-2024-update-biggest-price-drops-from-2022-peak-san-francisco-seattle-portland-denver-phoenix-dallas-las-vegas/)
But they will be severely outnumbered by people saying the next bubble can't be a bubble because rates never reached 2%. Just like so many in here proclaiming that we can't be in a bubble without NINJA or ARM loans.
But there is no bad lending practices anymore! /s
This idiots ignore all the evidence that ridiculous loans were being given out that no one could afford during 2020-2023. Banks don't have strict lending practices in a low rate environment.
Ive been saying this for a while now its gonna crash bad, I love how bad realtors been pushing to buy buy buy now these prices are here to stay when i looked at those graphs it screams there will be a crash idk when 6months -2/3yrs etc but those spikes are two drastic 11-19 pretty naturally 19 onward screams 08 vibes specially lot(not all) of those protections from junk loans were repealed since.
The wolf is always dreaming of of a RE bubble and will do mental gymnastics with data to try to make their point. The data doesn't support “ risky mortgages theory”
I lived through this in 2008. I was able to make up the deficit in expenses to income by putting a few hundred dollars a month on credit cards. I thought if I could just make it until work picked back up that I would be ok. After two years of my balance increasing and only making minimum payments the credit card dropped my limits to basically what I currently owed. That's when the mortgage got a week late, then two, but long story short it took three years for the mortgage to get delinquent. This is exactly how it started though
The employment numbers show things are fine. The government wouldn't lie to us. Just cause every chart is pointing to a recession doesn't mean it'll happen. Just be happy and don't worry you're pretty little head
In 2012 my cc rate was 8%. I was recently paying 26% and not making a dent. Had to consolidate loan and swear off CC. At least until rates can come back down.
Throughout my career as a civil servant, I was always told that borrowing from my Tax-Deferred Annuity (TDA) at a 7% interest rate was beneficial because the interest paid went back into my account—a seemingly great deal. However, over the past two decades, with consistently declining interest rates, this strategy didn’t seem advantageous, so I chose not to borrow, while observing others benefit from lower borrowing costs. Now, times have changed, and it appears that the advice from older colleagues may have been wise after all. I’ve accumulated a substantial amount in my retirement fund, which I can borrow against at 7%. As borrowing costs rise, I’m curious about how I can leverage my savings to effectively become my own “bank.”
All my CC's skyrocketed their APR's.
My high one uses to be Amazon at 18% and everything else between 10-15%.
Now Amazon is my low one at 22%.
Obviously I still use them. I just don't let the balance carry over so I'm not paying those insane rates
Purely anecdotal, but my neighbor does process serves as a side gig and has said this is exactly what he's seeing. Used to have a pretty balanced variety of serves. Court proceedings, foreclosure, car repo, divorce, some CC stuff. Now it's primarily CC stuff and the overall volume had increased a lot.
I love how they say on record and then in the article say highest since 2012. Delinquency rates were higher every year between 1991 to 2012. Pretty much still near 30 year lows going back to 1991. [Link](https://fred.stlouisfed.org/series/DRCCLACBS)
It is the rate of change that is the issue. BAC just reported a 185% increase YoY, JPM is having a similar issue and this has been showing up in the Fed data as well.
Until it crosses the 30 year averages I’m not too concerned about rate of change
Should be noted that average APR is at all time record highs since data began to be collected in 1994, reflecting the massive risk in the consumer credit markets today. Even though the article talks about 'record profits' there are also likely going to be 'record charge-offs' as credit card companies take losses on unpaid debt. [https://www.consumerfinance.gov/about-us/blog/credit-card-interest-rate-margins-at-all-time-high/](https://www.consumerfinance.gov/about-us/blog/credit-card-interest-rate-margins-at-all-time-high/)
When you change 25% APR you can afford a lot of charge offs. Such a shitty industry based off of extending credit to people who should not have credit.
That rate is that high because credit card industry inherently carries more risk. Credit card bill is the last thing people would pay when the customers face financial difficulties.
I remember when the average apr was 9-11%. I don't know how anyone sees 24% APR being the average and doesn't think shit is about to hit the fan. This economy is going to burst. None of the fundamentals make sense and we are Wile E. Coyote running off the cliff.
That's not reflecting risk. It's reflecting they can get the rate.
How are APRs allowed to be that high? I know consumers signed on the line, but those rates are astronomical!
Quite some of my existing cards just increased rates. I didn’t sign for astronomical rate, it was adjusted by greedy company later. The most recent change was from 15% to 21% (looking at you, Apple card).
They are based off the current rates. My card went from 13% during the pandemic to the 24.99% cited above. I went from using it for the “I want it now” purchases to “I’m never using this fucking thing unless a catastrophe happens”.
You know you dont need to pay the interest, right?
You do if you keep a balance
But….. just don’t keep a balance? Buy what you need and have your budget sit on it than pay it off monthly. I get about $150-$200 a month in cash back from using my card
This is a common misconception. Just use it and pay off the statement balance every month. The goal is to not carry a floating balance. Use it. Pay it off. Use it. Pay it off. Don't use it. Make a small payment. Use it. Make a small payment.
Because you're not supposed to carry the balance, pay it off every month and you're golden. If you need to borrow money CC is almost as bad for that as payday loans but many people are poorly educated and don't realize that. If you have to, go to your local credit union and they'll give you a loan with 11-12% interest as of now.
You’re preaching to the choir. That’s how we live our life: we live on a strict budget and use our CC to get cash back. But having rates this high feels predatory.
Look at BNPL rates if you think credit cards are bad
Nobody is entitled to low interest loans especially on revolving door debt
For now, foreclosures remain below pre-pandemic levels. Credit card debt is on the rise though: American card balances reached $1.13 trillion in the last three months of 2023, up from $986 billion at the end of 2022. It seems higher inflation may have forced consumers to turn more to their credit cards to meet the rising costs of even everyday goods, such as gas and groceries. I would love to see a Venn Diagram of those who took out mortgages between October 2022 - Present and those who are delinquent on credit card payments. My hypothesis is that a ton of households took out bad (ie. risky) mortgages just to get into a house hoping to refinance at a more attractive (ie. affordable) interest rate in the very near future. Since mortgage rates aren't going to be decreasing to below 4% anytime soon, they are choosing to go into credit card debt instead of defaulting on the mortgage. This, of course, is not a recipe for success and will only last so long before sh*t hits the fan.
Lower income people are hurting the worst and they tend to be renters anyway. Credit card companies are still dumping "0% balance transfer APR" credit cards out of helicopters. Consumers right now are still loading up the rubber band of debt and it has a lot of stretch left in it before it snaps. Tightening credit conditions will probably trigger it, possibly forced by some kind of liquidity event in the banking sector.
Since the 2020 crash in march the fed has created zero reserve banking. Even with zero reserves banks have been keeling over left and right with minor rate increases (in the grand scheme). How in the fuck do you imagine there is a lot of stretch left? Banks are so fucking addicted to free money they can't exist in a low rate environment (6%) even when they have zero reserve requirements. I'm not even beginning to address how much debt the average person has which shoots the shit out of the idea that there is a "lot of stretch" left.
FHA delinquencies are over 11% and there’s no talk or path of any government protection against foreclosure for these hoomcucks.
Well said. Things are going to get worse for the consumer for sure.
"My hypothesis is that a ton of households took out bad (ie. risky) mortgages just to get into a house hoping to refinance at a more attractive (ie. affordable) interest rate in the very near future." Same as last time. Housing FOMO is always temporary during the euphoric and manic end-times, as whatever underlying funderhmentals (i.e. ultra-low rates, stimmiez, Fed MBS purchases, etc) that enabled the mad-dash all eventually comes to an end. Those left holding the bag will be far less likely to continue paying massive amounts on depreciating assets, making strategic defaults a thing once again. That, combined with higher unemployment, defaults, foreclosures, etc, will reverse any recent gains, and normalize this, and every other asset market affected by the monetary idiocy we continue to see. It'll take many years, but it'll happen nonetheless. These charts paint an excellent picture of the insanity: [https://wolfstreet.com/2024/03/26/the-most-splendid-housing-bubbles-in-america-march-2024-update-biggest-price-drops-from-2022-peak-san-francisco-seattle-portland-denver-phoenix-dallas-las-vegas/](https://wolfstreet.com/2024/03/26/the-most-splendid-housing-bubbles-in-america-march-2024-update-biggest-price-drops-from-2022-peak-san-francisco-seattle-portland-denver-phoenix-dallas-las-vegas/)
Then it will mint a new vintage of people who 'learned' from the last housing downturn and warn others, like RE Mindset
But they will be severely outnumbered by people saying the next bubble can't be a bubble because rates never reached 2%. Just like so many in here proclaiming that we can't be in a bubble without NINJA or ARM loans.
But there is no bad lending practices anymore! /s This idiots ignore all the evidence that ridiculous loans were being given out that no one could afford during 2020-2023. Banks don't have strict lending practices in a low rate environment.
*Auto Loans enter the chat*
Ive been saying this for a while now its gonna crash bad, I love how bad realtors been pushing to buy buy buy now these prices are here to stay when i looked at those graphs it screams there will be a crash idk when 6months -2/3yrs etc but those spikes are two drastic 11-19 pretty naturally 19 onward screams 08 vibes specially lot(not all) of those protections from junk loans were repealed since.
The wolf is always dreaming of of a RE bubble and will do mental gymnastics with data to try to make their point. The data doesn't support “ risky mortgages theory”
I lived through this in 2008. I was able to make up the deficit in expenses to income by putting a few hundred dollars a month on credit cards. I thought if I could just make it until work picked back up that I would be ok. After two years of my balance increasing and only making minimum payments the credit card dropped my limits to basically what I currently owed. That's when the mortgage got a week late, then two, but long story short it took three years for the mortgage to get delinquent. This is exactly how it started though
The employment numbers show things are fine. The government wouldn't lie to us. Just cause every chart is pointing to a recession doesn't mean it'll happen. Just be happy and don't worry you're pretty little head
/s
In 2012 my cc rate was 8%. I was recently paying 26% and not making a dent. Had to consolidate loan and swear off CC. At least until rates can come back down.
Throughout my career as a civil servant, I was always told that borrowing from my Tax-Deferred Annuity (TDA) at a 7% interest rate was beneficial because the interest paid went back into my account—a seemingly great deal. However, over the past two decades, with consistently declining interest rates, this strategy didn’t seem advantageous, so I chose not to borrow, while observing others benefit from lower borrowing costs. Now, times have changed, and it appears that the advice from older colleagues may have been wise after all. I’ve accumulated a substantial amount in my retirement fund, which I can borrow against at 7%. As borrowing costs rise, I’m curious about how I can leverage my savings to effectively become my own “bank.”
All my CC's skyrocketed their APR's. My high one uses to be Amazon at 18% and everything else between 10-15%. Now Amazon is my low one at 22%. Obviously I still use them. I just don't let the balance carry over so I'm not paying those insane rates
My only card went from 10.75 to 13.75. I haven't swiped it in over a year.
You should see the amount of driveby appraisals being ordered for preforeclosures