The housing market crisis has left plenty of folks without homes, and it's also been speculated that it will impact the automobile industry; when adjustable mortgage rates jump up, home owners will have less money to spend on cars. But how will mortgage rate hikes affect our credit cards?
Higher rates and more stringent terms are two possibilities. As consumers lose more of their monthly income to inflated mortgages, they turn to credit cards to make up the difference. The debt trickles down as they use some credit cards to pay off their balance on others. Now imagine what would happen to all this credit card debt if a lot of these folks were to declare bankruptcy. Yikes.
The credit card companies are feeling the strain. Citi, American Express, and Bank of America recently saw their worst numbers since 2001. Across the board, delinquencies are beginning to rise while repayment amounts are starting to dwindle. Only time will reveal the full impact that the sub-prime mortgage mess will have on the credit card industry, but, at a glance, the looming situation is a bit of a nail-biter.
Higher rates and more stringent terms are two possibilities. As consumers lose more of their monthly income to inflated mortgages, they turn to credit cards to make up the difference. The debt trickles down as they use some credit cards to pay off their balance on others. Now imagine what would happen to all this credit card debt if a lot of these folks were to declare bankruptcy. Yikes.
The credit card companies are feeling the strain. Citi, American Express, and Bank of America recently saw their worst numbers since 2001. Across the board, delinquencies are beginning to rise while repayment amounts are starting to dwindle. Only time will reveal the full impact that the sub-prime mortgage mess will have on the credit card industry, but, at a glance, the looming situation is a bit of a nail-biter.
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