When Will The Credit Card Bubble Burst?


In case you do not know, there is another bubble, in strong growth in this country, which is about to break. The revolving consumer credit card debt continues to grow each month, finally breaking the $ 900 billion mark for the first time last June. The US Federal Reserve reports that this year, Americans have accumulated $ 39 billion in new credit card debt. We call the looming crisis the tsunami of credit cards. You better shut the hatches!

For the month of August 2007, in the United States, consumers added a new debt of $ 6.2 billion, adding to the $ 5.6 billion that they accumulated in July. Overall, including everything except mortgages, Americans have a debt of nearly $ 2.5 billion! Now that the mortgage game is over and all that money has been won, the next big thing that the banks will exploit for maximum growth and profits are at the rendezvous. Fees and penalties have been steadily increasing for years, as have average interest rates. Last year, banks generated more than $ 100 billion in interest and $ 50 billion in fees and penalties. these guys are not your friends.

Many people, who are experiencing the bursting of the housing bubble, rely more and more on their payment cards to live. As the property's equity value is dry, and their lifestyle does not change, or that circumstances such as lost jobs or medical difficulties cause them to continue relying on credit cards. payment, there is no end in view of the amount of additional debt. John Q The public will take. At some point, the dam must burst and many people will drown.

Who knows how many people have lived beyond their means in recent years, extracting temporary wealth from their real estate, then spending it for luxury, such as holidays, and lavish weddings in Tuscany? How many people have transferred unsecured credit card debts to their property, only to risk a seizure if they omit some payments? What about people who thought that the value of a house already too expensive would continue to rise and have contracted teaser rate mortgages in the hope of refinancing themselves with profit in a few years and who are now stuck with a mortgage that has doubled, and impossible to pay for it?

Now that the game is over, these people are turning to their payment cards to survive. People "hooked" by teaser rate mortgages are now unable to pay the "real" mortgage payment. Many are defaulting on their mortgage and are keeping up to date on their credit cards. Some use them as ATMs, limiting them to the maximum, and constantly asking for new cards that embellish their mailbox.

They live in a fantastic country, thinking that missed mortgage payments will not hurt their credit. Give it a month or three, and when credit cards find that you are missing mortgage payments, they raise your interest rates to 25% or more and you are, excuse my French, "damned ". Most of your payment will be wasted on interest, and debt repayment could take between 10 and 100 years.

Issuers know that people will do everything to stay up to date on cards and that people need money. The conditions for obtaining a credit card are at a 10-year low, according to a Fed survey. if you have a pulse, you can get a credit card. They even give credit cards to the peoples' pets.

Spam credit card solicitations that honor your mailbox are routed to the post office in semi-trailers on pallets and are unloaded with forklifts. Although mailings are actually lower than what was sent in 2005, the percentage of people who responded and have been accepted by credit card companies has increased steadily and has even increased three times since 2005!

All of this results from closing your house too expensive. It has never been sustainable, and I am sorry for the people who bought the most, paying over $ 600,000 for a 40 year old house that was not worth 1/4 of that price. To think that the bubble could continue to get worse and that the median price of a house would exceed the average person's ability to buy one, it was a matter of time before something had to give way, and that's the case.

Now, I talk all day to people who accept cash advances on their credit cards or who pay their mortgage; this will end at some point.

The credit card bubble will be next to burst. If your credit card debt is out of control, you must do something. Through the debt settlement process, there are ways to settle with creditors an amount less than what you owe, within 3-4 years, which will leave you in a position to get a new credit once completed. Read our free report on debt settlement to see if this option is right for you.

Comments are closed.