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- inactive, on 05/12/2009, -9/+93FTA - Advanta will cease lending June 10 after uncollectible debt reached 20 percent as of March 31, according to a statement and filings yesterday by the Spring House, Pennsylvania-based firm. The lender earmarked $1.4 billion to buy back securitized card loans with offers of 65 cents to 75 cents on the dollar.
The demise of credit card companies and the collapse of commercial real estate are the next phases of the Depression. They will be accompanied by growing unemployment and stagflation which has already started. - Ninh, on 05/13/2009, -5/+37What a surprise that people default on accounts that jack up interest to 30% at a whim. Most likely more than half of the "amount owed" is fictitious debt from the loan shark kingdom.
- Nodaki, on 05/12/2009, -4/+33FTA:
More than 90 percent of Advanta’s small business customers will have “adequate” access to alternative credit after the company halts lending, Browne said.
Yikes! That does not sound good. If Advanta only serviced a million small business accounts that is 100,000 of them that will not have access to any "adequate" means of borrowing. I still can't believe that small businesses are financing themselves with credit cards. Doesn't anyone use a local banker anymore for their small business? - midnightliberty, on 05/12/2009, -5/+33Yeah! Take on more and more debt! Don't scale back, you wouldn't want to miss out on the American dream!
- homah, on 05/13/2009, -4/+32but the tv told me the recession was going to end this summer...
- Bakedwafer, on 05/13/2009, -7/+25But Geitner, Obama, Bernanke said mid to end 2009 recession is over! CNN agrees.
- defendliberty, on 05/12/2009, -1/+16If people of good conscience and spending habits keep paying off their cards, will it just be a waste in the end if lenders collapse one after another. Will bigger banks acquire those debts, and then even bigger until you are just paying a higher form of TAX to the government?
Is it crazy talk to invest your paper $ (while it's still worth something)into something like food supplies, water, personal/home defense etc? Or gold/silver? - PhilPerspective, on 05/12/2009, -3/+18I think you've been listening to one too many Mike Rowe narrated Ford commercials. Advanta is a big credit card issuer to small businesses. Their doing this is very bad news.
- Wag3Slav3, on 05/13/2009, -2/+15Now if the people who didn't pay this money back, which has been written off by the lender and the lenders collectors are shafted, could be forgiven for the debt.
Unfortunately the credit card company has written of your debt, been shut down but there is still some ***** in a collection agency who will call you at work and harass you for the next 25 years to try to collect this "debt" that has been taken as a loss by another agency.
We need a law making it illegal for any company to transfer debt without the consent of the debtor. - SRSco, on 05/13/2009, -5/+18This is not fraud.You just interpret the law to suit your ***** insane ideas.
- yarcod, on 05/12/2009, -5/+18They bought stocks on credit in the 1920's. Worked our real good for those folks I hear.
And I hear a few years back a bunch of people were buying into real-estate on credit. I guess I missed that boat.
Investing with debt increases risk and diminishes returns. Suggesting people who know nothing about investing try that out is playing with fire. For those who got out of real-estate in time... or sold before the 29 crash... things were great for them. The rest of the wannabe investors brought down the system. - richmomz, on 05/12/2009, -5/+16"I just got a $150,000 line of credit at 3.5%" I think you mean that you were buying on margin. Some people were doing that when the DOW was at 14,000 and damn near lost everything. Margin buying was very popular in 1929 too - among people who would later fling themselves out of a high-rise window.
- crombenevolant, on 05/13/2009, -1/+12You bought a VCR?
- maz2331, on 05/13/2009, -0/+10This is a beautiful way to turn a 20% default rate into 50% overnight. Why pay off a card when there's no further utility in it? Why care about credit ratings if there is no credit to be had anyway?
That is the thinking we'll see a lot of, especially if the debt is owed by a small corporation and not personally co-signed by a company officer. - Bloodwine, on 05/13/2009, -2/+12It's funny that economists are saying we're recovering and we'll be out of this by early next year.
I think the recession is just taking a minor breather before it gets its second wind. Unemployment and foreclosures are still going up, and like you said, commercial loan defaults are the next big aspect of the recession. - davidlow, on 05/13/2009, -2/+12Peter Schiff was right.
- tzvika613, on 05/12/2009, -2/+12Do not view it as buying _homes_ on credit. A home is where you live. They were buying _houses_ as investment commodities on credit. When people are buying commodities prices go up. When people stop buying commodities prices go down. What happened is that there was no market for buying these commodity houses so the values went below what was owed.
A _home_ has value orther than its market price. A _house_ does not.
If you buy a house that you live in as a home for $200,000 and the market values goes up to $600,000 in about 10 years and then the housing market goes bad and the value goes down to $500,000 - you have not lost anything. If you buy a house that you do not live in for $500,000 - planning to sell it when the price goes to $550,000 for a quick profit - but the value goes down to $475,000 - your investment has lost money. - snotrokit, on 05/13/2009, -0/+9Nice to know that I am not the only one thinking that this whole thing is only taking a breather. Lets see what happens when the trillions of dollars (yes TRILLIONS) in unrealized debt wrapped up on commercial real estate and commercial backed securities goes ***** up here in the next few months.
- inactive, on 05/13/2009, -3/+12Looks like someone is angling for a bailout.
- iBits, on 05/13/2009, -0/+9Advanta, the nation's 11th-largest credit-card company, is unusual in that it does not offer personal credit cards.
http://www.philly.com/inquirer/front_page/20090512 ...
Some people in the comments are claiming they are charging a 25-44% interest rates. - Hillsfar, on 05/13/2009, -0/+8Why borrow on credit cards then? Why not go to the bank and secure a loan using collateral? Those interest rates are cheaper! I recently refinanced a used car at 5.49%.
Because these cardholders were borrowing via unsecured loans. They don't have the collateral. They decided to do it risky and investors in risk demand greater returns to make up for that risk. - pintocat, on 05/13/2009, -0/+8And when investor risk doesn't pan out, the american taxpayer will bail them out.
- briguymaine, on 05/13/2009, -0/+7don't listen to the tv, the internets is where the good information is. believe everything the internets say, trust me.
- kinerry, on 05/13/2009, -1/+8This isn't that bad, MBNA lowered ALL credit card limits to $300.
We're talking people with $20,000 limts now have $300. Some were already past $300 when they were lowered and were not only dinged on their credit card score for high utilization, but also over-limit fees. - Miraclerock, on 05/13/2009, -2/+9Got to cut off the credit before inflation hits, just another way to screw the little guy.
- schnikies79, on 05/13/2009, -0/+7"local bankers" are typically small-time bankers and didn't receive bailouts.
I have three local independent banks in my area. None asked for or received government bailouts. All are doing just fine. - jerbaker, on 05/13/2009, -0/+7I had a card that was 2.6% APR because I always paid in full and never was late for over a decade. They recently decided that they were going to quintuple my interest rate, and so I closed the account. The credit card companies have learned nothing from this mess that they helped create. They drive away the good paying customers by trying to get me to pay five times more interest to cover their bad loans, and all they'll be left with are the defaulting customers. Do you think 20% of their accounts are in default because that many more people are in default, or because a lot of the good customers left?
- nullcodes, on 05/13/2009, -1/+8Umm, i dunno what they did, but whatever it was .. somehow I swiped a piece of plastic and now I have me a large screen tv and vcr.
You're saying I don't owe any money to anyone? - sheeplescareme, on 05/13/2009, -3/+9yes, yes, and no.
- dizavin, on 05/13/2009, -1/+6heh, so now it's going to be hard to spend money when you don't actually have any money to spend?
what a concept! - phlux, on 05/13/2009, -0/+5This should be the first question by those who are called;
Get call from collections:
"Are you the original lender?"
"Did the original lendor write this off as a loss?"
If they did - then tell collections "sorry, but this was already written off as a loss. I cannot and will not pay on this debt. I will pay a fraction of the prinicpal - no interest." - inactive, on 05/12/2009, -5/+10NoLibs, have you ever wondered if the cake is a lie?
You have, but he's never gonna give it up.
Successful troll is a success.
A winner is you. - xDynaBlade, on 05/13/2009, -0/+5...Digg me up if you're not surprised by this, either.
- yarcod, on 05/12/2009, -6/+11"No, I was not buying on margin."
"Buying on margin is borrowing money from a broker to purchase stock. You can think of it as a loan from your brokerage. Margin trading allows you to buy more stock than you'd be able to normally."
So what's the difference here between a line of credit and on margin again? Get your loan from a bank instead of a broker? Way to play it safe.
Now... it's all well and good to say that you, a self proclaimed PhD in Economics, a fortune 500 CEO, and day trader can get ahead under those conditions. But twice in history people, en masse, invested on credit and the results were systematically devastating. There are no sure things and most people don't even balance their own bank account.
Obviously, millions of people just lost heaps of money buying homes on credit... or we wouldn't be in the mess we are today.
In fact, it only takes 10% of the investment population losing heaps of money to bring the system to its knees. - sonnybobiche, on 05/13/2009, -0/+4While I agree with your assertion that they're putting on a show for the American people, I'm pretty sure your previous facts are incorrect. Having read the contract with my credit card company, I can assure you it says they reserve the right to raise interest rates at any time and without prior notification.
- goldpig, on 05/13/2009, -0/+4This is a depression with a little d. The great depression was a different time under different circumstances. The difference is that now there is mortgages, credit, etc. floating around needing to be paid but can't because of unemployment. This can still get much worse as people lose jobs and banks continue to lose money on unpaid debts. If it wasn't for our government and federal reserve infusing money into the banking system it would be darn near close to the GD.
- JoeMerchant, on 05/13/2009, -2/+6Is it crazy talk to invest your paper $ (while it's still worth something)into something like food supplies, water, personal/home defense etc? Or gold/silver?
Depends... do you have enough money / resources to make yourself self-sufficient for the rest of your life? And your children's lives? My guess is that since you are asking the question, the answer is no, you don't, and if you go out hoarding in panic mode, you'll stimulate the economy by wasting your money on things that will not ultimately benefit you (or anyone...)
An economic downturn is not a Hurricane or Earthquake - in those situations you need to be self-sufficient for a few weeks... think how you are going to survive the next 10 years... odds are you'll need to buy food and water from other people, continue to pay taxes / debt or even rent on your shelter, etc. To do this you're probably going to need more cash than you have on hand, so you're going to need income....
What does make sense? Conserve where you can. Do you really need to spend money on travel and entertainment? Can you take that time and turn it to productive (income producing) pursuits? If a "luxury " like a car enables you to earn more than it costs, then it's more of a tool than a luxury and you should keep it (or, possibly replace it with a more efficient version that still serves the purpose, but remember, $10,000 for a new car buys 5000 gallons of fuel....)
Get your personal economy in order, if we all do this, the nation's economy will be just fine. If we all continue to spend more than we make, and spend on things that essentially do nothing for us, then we're going to continue to have economic troubles. - FatBurger, on 05/13/2009, -0/+4You also have to remember that a lot of these that they're talking about are tiny businesses, some run out of a home. Securing a loan isn't as easy.
- zacharytelschow, on 05/13/2009, -0/+4That's the case for the time being, but with the government printing more money and economic growth flatlining, stagflation is certainly possible.
- marksism, on 05/13/2009, -0/+4Employment is a lagging indicator.
- wmarcello, on 05/13/2009, -0/+3So the bailout is working!
Wait, what...? - drmangrum, on 05/13/2009, -0/+3I'm more worried about the government taking over that corner of the industry. The bailouts seem to be full of bait and switches where the government solution is to let the government run it.
- frequentFlyer, on 05/13/2009, -0/+3lol credit cards
- Barrysk, on 05/14/2009, -0/+3Someone starting their adult life has more need for a positive credit history than a few dollars interest earned.
- WhiskeyLemur, on 06/30/2009, -0/+3Would that actually work? I don't know enough about the legalities of the matter, but somehow it doesn't seem like something the collections reps would just go along with. Also, isn't there a 7-year statute of limitations on debts, so technically the calls should stop after 7 years, not 25....?
- Nodaki, on 05/15/2009, -0/+3@cublicledrone
You obviously do not know anything about starting a small business. I received a small business loan in 2003 without a problem because I did my homework, I had a tight business plan, I had good credit, and I had collateral. It also helps that I knew the owner of the bank, but networking is essential to starting a small business. - seobro, on 05/13/2009, -0/+3Hey, we gave these idiots billions and they are sitting on the money.
- blapierre, on 05/13/2009, -0/+3I don't think you understand what "write off" means. If a lender "writes off" a loan, then they have accepted the loss.
- inactive, on 05/13/2009, -0/+3Welcome to securitization. Moral hazard wut wut?
- AngelaQ, on 05/13/2009, -1/+4I run a small internet business, and there are transactions that have to be made by credit card. There are no options.
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