WASHINGTON—Studies indicate that credit card defaults and related write-offs increased drastically since 2006. Today, lenders write off 33 percent more in credit card debt than they did two years ago.
Statistics show that about 35 percent of all credit card holders are already exhibiting signs of possible default. Late credit card payments result in fees many consumers can’t afford.
Credit card debt accelerated to unprecedented heights since bank loans began to dry up due to mortgage defaults. Total U.S. credit card debt reached almost $800 billion in November 2007, up from around $680 billion in March of last year, according to the latest available government statistics.
In the aftermath of the U.S. mortgage crisis, the credit card bubble may be next to burst. In the past few years, banks have aggressively marketed credit card ownership and usage to consumers with limited income and low credit scores. Credit card standards remain lax, while loan standards have tightened to a degree. Continue reading »