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Capital One 30+ Delinquencies Increase As Charge-Off Rate Declines
Capital One's August charge-off and delinquency rate data was filed today, and while some voodoo accounting likely helped the annualized charge-off rate decline from 9.83% to 9.32%, the 30 day+ delinquency increased from 4.83% to 5.09%. So while the marginal credit card holder is "expected" (see definition below) to start paying credit card balances due, the recidivist abusers keep ignoring those 3rd notification letters.
The definition of the net-charge off rate as provided by COF:"Average Loans Outstanding used in the calculation of the Net Charge-Off Rate includes an estimate of the uncollectible portion of finance charge and fee receivables. We recognize earned finance charges and fee income on open ended loans according to the contractual provisions of the credit arrangements. When we do not expect full payment of finance charges and fees, we do not accrue the estimated uncollectible portion as income. The estimated uncollectible portion of finance charges and fees is adjusted quarterly."
August charge/off delinquency summary:
July charge/off delinquency summary:
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This isn't going to be pretty. Everyone is whistling through the grave yard praying like hell the devil is busy elsewhere. But we all know the devil is in the details.
Check out denninger for the latest numbers on all the credit card and COF actually shines like a polished turd compared to the other banks.
some really bad charge offs happening.
What's in your wallet...dust, mold, & moth eggs.
And a coupon for sub(standard)way
JPM delinquency Rate 4.82%
Write off rate 10.07%
Green Shoots? lol
I think they have the color wrong on today's stock prices for the CC's. Are the balance sheets becoming transparent?
JPM, BAC, C, COF, DFS - red.
I'm sorry... didn't you get the memo... the new "green" is "red"... its a good thing now to be "red"... I know that it can be confusing at times because the rules just keep on a changin...
Wishful thinking accounting can do just about anything except manufacture cash flow...
This woman got fed up with BAC after they raised her interest rate to 30% for no reason, and she had something she wanted to tell them:
http://sunbringerblog.blogspot.com/2009/09/debtor-revolt-begins.html
Similar sentiment will not bode well for tier 1 capital ratio of our beloved masters and overlords.
After seeing that last week, I checked my cards' rates. I had a CapOne card with a rate of 29.4%! I'm too busy to read all the crapola they mail me, so at some point they doubled the rate on me and send me junk mail informing me - and I likely chucked it. Fortunately, I pay my full balance monthly, so no harm done. I did my part to decrease the denominator. On Friday, I called and cancelled my card and paid off the remaining balance. They lost a customer with a 900+ credit rating because of their shenanigans. Who needs credit these days anyway.
I've worked in the Card industry so here is an insider perspective.
Cancelling your account was the intended effect by the credit card company. Cards are expensive to keep open and without a yearly fee and no balance you were costing them more then you were making them. Unless you were charging huge amounts a month that would generate significant interchange fees.
In a year or two your type (pay it off every month) will more then likely expect to pay a yearly maintenance fee for the convenience of having a card.
and yet, COF marches forward , stock price (generated courtesy of mom,hft) higher and higher, on hope and the wings of a prayer, that you too can have a 5000 credit line, with a rate of 23.999% to buy the things you really need and want.
Check out SPY volume...57mm shares and we're just 50 minutes into the trading day. The slightest whiff of sellers & volume really picks up, along with a VIX insta-pop off the 23mid print.
Jpm bought my friend's wamu card.. Jpm didn't pay my friend's wamu bonds.. So Jpm didn't get paid yet 5 months for wamu card either, and counting...
Before this recessopression if anyone I knew ever talked to bill collectors or repo folks I had no idea. Now the whole clique, through sharing our experiences, is wise to the whole debt collection game. Little things like the expedient or sassy way to get rid of creditors calling constantly. How to report things on the taxes to avoid most payments. How to talk down a bill or stuff it entirely.
These are all things that a year ago was unknown to me and now is the collective knowledge of most folks I know. When asked to reflect on facts and figures that don't have an immediate impact on someone's life, then yes people are stupid. But when someone's back is against the wall and it becomes about survival, we're some crafty mothafuckas.
Our entire economy is a game of musical chairs, and the government is vastly underestimating what folks will do to get a seat once the music stops.
Any tips on beating back the debt collectors? My life and finances imploded over the past eleven months and my back is against the wall. Let me know what works.
Consumerist (www.consumerist.com) is good for this stuff. I don't have a specific article in mind, but you may wanna try searching their previous posts for "debt collector" or something like that.
Thanks!
when answering the phone, always know who it is on the other side of the line before identifying yourself. "sorry, you have the wrong number" is heaps easier than going through the whole cease and desist process. never call ANY creditor from an unblocked number.
if you're faced with any sort of repossession, LEGALLY make it be known you own a gun. many repo companies will not come to your property if they know you own a firearm. however, don't be dumb and catch a menacing/intimidation charge out of it.
How about...don't spend what can not be paid for? omg, that's just too forthright & easy. That mentality, I just can not sign onto.
I look forward to the book and requisite tour...'Deadbeat math for Dummies'. And when it's released I will surely pay for it with plastic, so therefore I can fulfill the circle of stupidity in US consumption patterns.
Thanks McGriffen! I'll remember that the next time I have a medical emergency.
Let's see, if I have them save my life can I afford it? Yes, I can, over time, if we aren't in the middle of an enormous bubble economy that destroys my assets, kills my business, and the TBTF pile on with increased minimums, 30% interest rates (previously 4.99%) and kill any hope of my making it through this.
well sweet lord a medical emergency is going to be different...the attempt at biting humor is unbridled consumption followed by intentional default. Circumventing the decency to pay back one's debt is a stark contrast if a medical need must be dealt with.
Ron Paul was on Morning Joe. Even though Huffington was blowind hot air about the mortgage foreclosures, at least Paul/Scarbarough were intelligent.
Had to turn CNBC off when Rod Blagovich was on this morning. Must be an incredibly slow news day on CNBC. I mean, Ivanka Trump wasn't available? We must be due to 3 hour interview between Becky Quick and an Octagarian Billionare that lost 30% last year? No interviews with Jeff Immelt? C'mon.
Just for reference: Capital One's Net Charge-Off Rate in 2006 was 3.37% versus a current rate in 2009 of 9.32%. That cannot be good for the ole' profit margin.
No capital one's realisitic net charge off rate was like 6% but they held it on the books hoping it would cure. We try to fix manufacturing by moving future demand into the present and holding off present losses till the future. At some point the terminator is going to drop out of the sky and kill everything.
"At some point the terminator is going to drop out of the sky and kill everything."
Well then, I hope he is naked like in Terminator 1... there needs to be some eye-candy entertainment in this whole sordid mess :-)
Here's a green shoot for ya
Global airlines will collectively ratchet up losses of $11 billion this year, instead of the $9 billion previously predicted, as rising fuel prices and 'exceptionally weak' fares dent the bottom line, the International Air Transport Association said Tuesday.
Revenue for the industry will decline 15% to $455 billion this year as airlines continue to cut ticket prices, particularly in the premium part of the cabin, to try to stimulate demand.
"Yields have fallen dramatically. We have never seen anything like it in 64 years of tracking at IATA," said Chief Executive Giovanni Bisignani.
"The situation you see with yields could be a long-term disaster because when yields fall they almost never recover. That could lead to long-lasting structural change," he added.
Passenger traffic, which has showed signs of recovery over the summer, is now seen down 4% this year and cargo traffic down 14%. That's much better than the 8% and 17% drops forecast back in June but won't be enough to keep a lid on losses because of the lack of pricing power.
I note that JPM upgraded LCC (us death air) and UAL last week.
Arrrr! Do ye have a wallet?
More green shoots anyone
A report by the Boston Consulting Group finds that the U.S. is no longer home to the greatest chunk of the world's wealth. That honor now belongs to Europe. See related story.
Of course, it's not like anybody is really getting ahead. Global wealth fell nearly 12% in the past year to $92.4 trillion. It's just that America's share is falling faster than Europe's, where total wealth declined a mere 5.8%.
And it could just be a case of America having a higher "beta" than the rest of the world. In which case, even though wealth gets destroyed faster in the U.S., it also is created more quickly there.
One had better hope so, given that the effect on the U.S. tax base over the past year has been pretty devastating, especially at a time when the country's need of big earners has never been greater.
Interesting to see the response to continued delinquencies by the banks...especially the apparently voluntary ones. Do they negotiate better terms for the debtor in order to increase the probability of payback, or do they hire Blackwater aka Xe to negotiate for them?
No they stick it on national debt sheet and try to get anyone who will pay to pay.
So the fed and govt hire blackwater?
Every bank is out today with a coordinated message of "less demand for credit from consumers." Oh, to be a fly on the wall...
On a side note, think it's time to look up just how much short interest is still left on IYR... I smell more secondaries coming as soon as that closes out.
oh poor babies. losing a lot of money on their credit card portfolio huh? couldn't happen to a nicer group than crapital one. too bad that most of their credit card receivables have been securitized so that they have laid off this problem on bond holders.
Why is Toy's R Us opening scores of temporary stores? Is this the same Toy's r Us that gave away 500,000 dollars to charity and spend $4.5 million advertising it?
good articles; good articles 4 slow news day ..http://www..
hat tip: finance news & finance opinions
Ingrown green shoots.
Got a nice note in the mail from amex telling me my rates and fees were going up, no big deal since I pay in full and don't carry a balance...Considering I'v always paid on time in full it's pretty ubsurd for them to do this, seems there strat is to cut deals at 50 percent of with all the deadbeats and looser they stupidly extended credit to who arn't paying, while asking those paying there bill to pay extra to cover the deadbeats...Realisticly if I did cary a balance and they pulled this crap, I would transfer the ballance and close the acount, or just call and demand to settle the balance at 50 percent off...These dumbass increased my credit line without me even asking at one point, but I guess they knew they had an ace in the hole with a currupt worthless gov that would steal from the responsible and help bail them out...
"I pay in full and don't carry a balance"
This was the cause of fees going up. You are costing the card company more then you were making them. From a card company perspective you are a type of dead beat.
If you have a balance < 75% of credit line and pay on time and have a decent credit score your fee's will probably not go up.
We are being fed lies lies lies lies lies lies lies. This rally is computer-controlled and accompanied by a louder propaganda campaign than I ever imagined possible.
good articles; good articles 4 slow news day ..http://www..
hat tip: finance news & finance opinions