Credit card debt hits new record, raising warning sign

As they've expanded the welfare state, Dems have mocked Republicans who warned about the debt. It's been that way since FDR.

 

What Matt means is that you get savings when using cash-back credit cards, a min of 1%, but up to 6% of purchase.

That's what we do, and then pay off the balance at the end of each month.

 

The reasons Democrats mock Republicans about debt is because Republicans only care about the debt when a Dem is in office. When the GOP has all the power, they run up the debt like drunken sailors, just like the king of debt, Trump.

 

Oh come on now?
All the banks - including the Fed - said the same nonsense before the last crash.
You seriously think a major, financial services company is going to try and put the brakes on major debt? They LIVE for major debt.
I don't think we are at the tipping point yet.
But the M2 Money Velocity is BY FAR the lowest on record and has been falling for years.
https://fred.stlouisfed.org/series/M2V
That means people are not spending money. And almost every time in history that happened, a major correction followed.
And that jives with record debt.
They are not spending money, just spending new, cheap debt.
And credit card debt is desperation debt. It's mega, high interest rate means it is always the last resort.
The Fed will do whatever it can to keep the party going. But eventually they will have to raise rates (inflation, sinking dollar, etc.).
And when they do - the party will end...guaranteed. It ALWAYS does.
BTW - the dollar index has lost about 10% since Trump took office (and is the lowest since late 2014)...and is still falling.
https://www.bloomberg.com/quote/DXY:CUR
If that keeps up much longer, the Fed will almost certainly step in and raise rates to stop it.

 

Why?

“You have probably caught that Visa credit card commercial in which a wily wife hides her many shopping sprees under the bed and up in the attic, all out of sight from her clueless husband.
The punch line is that she could have won all that stuff she rung up on the plastic. But the reality behind such behavior is hardly a laughing matter.” (Rene a. Guzman, San Antonio Express-News Jan. 12, 2005 12:00 AM)

“Amendment Allows Consumers Who Are 21 or Older to Rely on Accessible Income for Credit Card Applications

WASHINGTON, D.C. – Today, the Consumer Financial Protection Bureau (CFPB) updated existing regulations to make it easier for spouses or partners who do not work outside of the home to qualify for credit cards. Today’s amendment, first proposed by the Bureau in October 2012, allows credit card issuers to consider income that a stay-at-home applicant, who is 21 or older, shares with a spouse or partner when evaluating the applicant for a new account or increased credit limit.

“Stay-at-home spouses or partners who have access to resources that allow them to make payments on a credit card can now get their own cards,” said CFPB Director Richard Cordray. “Today’s final rule is an example of the Bureau’s commitment to working with consumers and financial institutions in order to ensure responsible access to credit for American families.”

The Credit Card Accountability Responsibility and Disclosure Act (CARD Act) became law in 2009. The CARD Act requires that card issuers evaluate a consumer’s ability to pay before opening a new credit card account or increasing a credit limit. Under current CARD Act regulations, a card issuer generally may only consider the individual card applicant’s independent income or assets.” http://www.consumerfinance.gov/news...ome-spouses-and-partners-to-get-credit-cards/

See the FED ruling:

“The Federal Reserve's rule told credit card companies that they no longer can consider household income when assessing the creditworthiness of an individual who applies for his or her own card. Under the rule, only an individual's own salary or other income -- rather than combined household income -- can be considered.”

Read more: http://www.creditcards.com/credit-c...cards-household-income-1282.php#ixzz3WiwAm9JK


See the reason to oppose it:

“Opposition from CARD Act authors

U.S. Reps. Carolyn Maloney, D-NY, and Louise Slaughter, D-NY, both among the principal authors of the CARD Act, said the rule "goes beyond the intent" of the law and "represents a serious risk for women in abusive domestic partnerships."

"Women trapped in abusive marriages may be unable to work due to a controlling spouse, a hallmark of relationships characterized by domestic violence," Maloney and Slaughter told the Federal Reserve in a letter as it was considering the rule. "The availability of an independent credit card may represent her best chance at establishing independence and a path out of a dangerous relationship."

After the rule was announced, Maloney and Slaughter said they would be studying its implementation and would report any problems to the new federal Consumer Financial Protection Bureau, which could write its own rules beginning in July.”
Read more: http://www.creditcards.com/credit-card-news/stay-at-home-parent-credit-cards-household-income-1282.php#ixzz3Wivmh5r8

http://www.politicalwrinkles.com/ne...rd-rules-limits-teen-cards-10.html#post115060

 

So do republicans

 

Yeah, I have remarked on the low money velocity for many times. This ties into my point on private debt in the OP:


One of the reasons why the recovery after the great recession was poor was because of the debt deleveraging between 2008 and 2015. That was money DIRECTLY taken out of the economy. There was NOTHING that Obama (or any other possible president for that matter) could have done about it.

Now, people are finally ready to spend again (i.e. take on more debt), which is a major contributor to the "Trump boom".

Of course, looking at the above graph, even after 7 years of debt deleveraging, we are at debt/GDP levels that are beyond those causing the great depression. How it is prudent policy to fuel another debt binge through reckless tax cuts is beyond me.

We all know how this will end: Another short-lived spike in private debt, and possibly a few feel-good years, followed by a brutal recession, if not depression.

Welcome to the debt-slavery world, kids.

 

Much of that rests "Again" on the shoulder of the last Administration! QE and zero interest rates clearly didn't have the positive results they "Claim" or expected! With that mistake came massive debt an we both know how that has influenced the "Reluctance" to raise interest rates, then, and today You certainly do add the importance of bringing corporate trillions back to the U.S. from abroad along with domestic corporations and on a smaller scale back in to the hands of the people paycheck!

So maybe we should wait and see how this new tax formula changes the amount of M1-M2 amounts in this country, and hopefully bring EFF rate back to a sensible point without the added inflation burdening the U.S. consumers!

All that aside, my original reply was to the article in conjunction with the topic header, the link provided has hardly the doom and gloom the OP spun it out to be in the thread header

 

Federal fiscal discipline does not stop massive family debt, or stop a spouse from having two Capital One cards, two Discover cards, and two Chase cards without the knowledge and consent of the spouse whose income and equity she is using because of traitors U.S. Reps. Carolyn Maloney, D-NY, and Louise Slaughter, D-NY. (see above)

2004 Democratic Platform:

"Average family debt is higher than ever. And as they lose the struggle to make ends meet, one out of every seven middle class families may be bankrupt by the end of the decade...over time, fiscal discipline saves families thousands of dollars on their mortgages and credit cards.”

Neither Feeney or Kosmas responded to this:

"No creditor shall issue debt to any household which could exceed a 36% debt to income ratio, without the written knowledge and consent of both spouses or domestic partners in the household and each and every creditor the household already owes."

"Your debt-to-income ratio

36% or less: This is a healthy debt load to carry for most people.

37%-42%: Not bad, but start paring debt now before you get in real trouble.

43%-49%: Financial difficulties are probably imminent unless you take immediate action.

50% or more: Get professional help to aggressively reduce debt.

Source: Gerri Detweiler, author of The Ultimate Credit Handbook"
http://www.usnews.com/usnews/biztech/tools/modebtratio.htm


"BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM DivisIoN OF BANKING SUPERVISION AND REGULATION Date: September 30, 2005:"

"Another parameter that could be combined with LTV ratios to determine capital requirements might be a capacity measure such as a debt-to-income ratio." http://www.federalreserve.gov/BOARDDOCS/PRESS/BCREG/2005/20051006/Basel1Amemo.pdf

"The Charles Schwab Corporation ("Schwab,,)l appreciates the opportunity to comment on the Advance Notice of Proposed Rulemaking ("ANPR") issued by the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation and the Office of Thrift Supervision (together, the "Agencies") regarding proposed revisions to the Agencies' existing domestic risk-based capital rules...

...P. 14 Another parameter that could be combined with LTV ratios to determine capital requirements might be a capacity measure such as a debt-to-income (DTI) ratio. The Agencies seek comment on (1) the use of an assessment mechanism based on LTV ratios in combination with credit assessments, debt-to-income ratios, or other relevant measures of credit quality; (2) the impact of the use of credit scores on the availability of credit orprices for lower income borrowers, and (3) whether LTVs and other measures of credit worthiness should be updated annually or quarterly and how theseparameters might be updated to accurately reflect the changing risk of a mortgage loan as it matures and asproperty values and borrower's credit assessmentsfluctuate. While we do support the use of combining LTV and industry standard FICO type credit scores in a risk-weighted capital guideline, as noted above, we do not support the inclusion of a capacity measure such as debt-to-income ratio (DTI). Our concern regarding the inclusion of such a measure is two-fold: (1) DTI is a much more subjective measurement than LTV or FICO score, and is not consistently calculated and applied by all lenders. Different lenders will calculate both income and debts using various guidelines. Additionally, some lenders will base DTI calculations only on verified income, while others may rely on stated income. There is too much variability in how this measurement is calculated and applied for it to be a meaningful guide to risk-based capital guidelines. And, (2) statistics have shown that DTI is a much less robust predictor of probability of default, or loss given default, than FICO scores and LTVs.

We do not believe that the use of credit scores in the risk-based capital guidelines will have a negative impact on the availability or price of credit to lower income borrowers. While the cost of capital can generally affect loan availability and price, we do not believe that applicant income is necessarily correlated with credit score. Many applicants with lower incomes have acceptable credit scores, while many applicants with high incomes have unacceptable credit scores. Banks are motivated to grant loans to generate revenue and profit, and most banks have very progressive mortgage programs for lower-income and fIrst-time homebuyers. The Community Reinvestment Act provides additional motivation for banks to reach out to meet the credit needs of the low-to-moderate income borrowers in their assessment areas" (January 17,2006, http://files.ots.treas.gov/comments/3173270d-dbd0-4b64-b398-487753ad9f27.pdf )

"Fed to discuss max 50% debt-to-income ratio for borrowers, prohibition on 'stated-income' loans to subprime borrowers, and other new rules" (May 29th, 2007, 3:38 pm) http://mortgage.freedomblogging.com...ns-to-subprime-borrowers-and-other-new-rules/

 

We do the same. But the 1% cash back is bait for a lot of people who end up paying 18% and higher interest.

 

So you can't show where they actually said that, ok. You could have just admitted that.

 

Then that's on them.

And if you're not getting a minimum 2% cash back, you need to take a deeper look at your credit card portfolio.

 

Cashback cards =savings.

 

Are you a loon? Have you lived under a rock? You honestly don't know that Republicans have been more concerned with the debt than the Democrats?

That's what the Tea Party was all about: the size of government and fiscal responsibility. And only the Republicans have supported a balanced budget amendment. Democrats wouldn't touch a balanced budget proposal with a 10 foot pole.

 

Can you give me some hints on when to cash those gains in please?

 

This thread is for ridiculing Trump only.

 

Haha, where is the Tea Party now, when Trump is adding $1.5 trillion to the EXISTING deficit through unpaid-for tax cuts? They slinked into oblivion as soon as Obama finished his second term. Now they celebrate the public debt that Trump is running up. All a bunch of hypocrites.

 

I have a credit card. I use it to pay all my bills and large item purchases. I get decent frequent flyer points (which admittedly can only really be used on upgrades these days), but I've never failed to pay it off within the 55 days. I always ensure I have savings sufficient to pay it off in time.

In this way I get something for nothing. My something is paid for by idiots who get a credit card and use it for... well, credit.

In life there are lots of opportunities where the smart exploit the stupid. Use them to your advantage.

 

You are right, Dairy. And actually, it started right after the fall of the Soviet Union. Suddenly the world was safe for 'Democracy'...? Well, as far as Korporate Amerika was concerned, with the fall of our Iron Curtain nemesis, the world was indeed safe for CAPITALISM. Almost from the moment that Russia bugged-out of Afghanistan and its European satellite countries began pulling away, American corporations began cementing deals to move more and more of their operations, production, and everything else imaginable off-shore.

I may be an arch-Conservative on the economy, but I'm very skeptical that this latest 'tax reform' is really going to do much for American workers beyond, say, a year from now. Republicans want to save as much of Congress as they can in the upcoming November elections, so they'll be doing everything they can to make rising employment and some increased wages look larger-than-life. They'll be cheerleading a mantra of "happy days are here again"... and that will be true... but mainly for big corporations and stock market gamblers.

BUT, I suspect that in the long-term a lot of that gigantic tidal-wave of money corporations will keep in tax savings will be plowed directly into more robotics, information technologies that 'streamline' the buying/selling/delivery process, and other methodologies that will ultimately concentrate even more and more wealth in the hands of fewer and fewer people. Re-read Orwell's masterpiece, "1984", Dairy... unfortunately, it's all in there....

 

If the goal of capitalism is to reap as much profit as possible, then automation is the future. And people will have to train into new areas.

A more noble goal of capitalism would be to provide jobs along with profit. But at some point, someone will automate and it's keep up or lose out.
Automation have been happening since the invention of the wheel.
It's just folks need to realize, when something kind of revolutionary comes along, automation wise, it will disrupt the working class and a means to provide for the transition needs to take place.
Else folks starve, go homeless, and the consequences of that is usually worse than some welfare.

 

Dumb money always supports and makes life easier for smart money as they are not intelligent enough to help themselves.

 

I wish that we could avoid what I see in our future as a looming international disaster of unprecedented magnitude, and somehow safely and painlessly evolve into some sort of planet-wide society like that of fictional concepts, like "Star Trek". What an idyllic life people seem to have in those stories! Nearly everyone you see just wanders around, doing whatever they like, whenever they like, with no concern for money, or going through any kind of difficulty to have anything they want. Who wouldn't like to live in a situation like that, Dairy? And, if we survive as a species, we might just be able to achieve it -- but I doubt it.

Read, or re-read, Abraham Maslow's "A Theory of Human Motivation", and then you may feel the same despair that I do. No matter what we do in the near-term it appears certain now that we will:

1. Have warfare that will eliminate at least half the world's population.
2. Adopt an international central-government afterward to rule over all nations.
3. Adopt a one-world monetary unit (currency), based largely on the same "imaginary money" concepts we've had since the 1970's.
4. Practice strict, state-mandated birth control, in which all births are planned yielding only persons with the desired genetic characteristics.
5. Develop and perfect robotics and IT methodologies to a "sweet spot" where very few people will need to do any manual, repetitive "work" any more.

And yet, even with all that, and assuming we survive the next World War, I'm haunted by the words Arthur C. Clarke wrote in his amazing, under-appreciated book, "Childhood's End" -- "The stars are not for man...."

."Sorry, Jim, we can't have humans out here!"

 

Look at the graph on private debt that I posted above. It shows that, in the absence of real wage growth, the economy basically grew by the consumer taking on more debt. Now, how is that sustainable?

What those tax cuts will do is just jump start another cycle of consumer debt taking, which is already on the background of too much consumer debt. The corporations laugh all the way to the bank, having the consumer buy their products by paying for them first, and then paying a second time through the debt service payments. Of course, that kills the goose that lays the golden eggs, the consumer.

In the meantime, the corporations will put this profit to executive salaries and automation.

 

The problem is that the smart will be hurt too when exploitation of the stupid becomes too egregious. Many of them are, however, not smart enough to realize that.

 

That is a very liberal approach. Except for eliminating 1/2 the world population.
Greed would be the big reason for such an action.
But, one, if humankind survives, and I think it will, is what is happening.
The world is shrinking.

Almost fits the John Lennon song. Imagine.