Credit card debt likely to cause lenders further financial pain
February 24, 2009 by admin
The dramatic drop in the economy has taken its toll on many institutions. Late in 2007, sub prime mortgage lenders were forced out of business as their loan portfolios lost value, in 2008 over 250 banks and mortgage lenders were forced to close as the housing market completely fell apart. The next big obstacle facing the financial industry is going to be the fallout from the credit card industry. Consumers who have lost their jobs or seen their incomes slashed due to the challenging economy will only add to the challenges facing the nations top lenders. The government has attempted to address this proactively through the TALF program announced earlier this year. Some of the largest credit card companies are looking to move more aggressive to head off the challenges of an economy spiraling downhill. American Express announced this week that they would offer an incentive of up to $300 on targeted accounts if the consumer agrees to close the account and work towards paying off their balance in full during an agreed upon time. The rate of charge offs on credit card debt will likely surge in 2009 and their is likely to be a huge spike in bankruptcy filings.