Credit Cards - Next Credit Crunch victim

[tomj]

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Okay so I was banging the doom drum to a few friends on IM yesterday about what major credit card companies will start to go belly up this/early next year???

My money is on Captal One to go first but more worryingly the imact this will have:

1 - large chunks of the population will have the small available credit they have wiped out. no spending and no backup!
2 - this will have huge impact on the affiliate marketplace as people wont be able to shop online
3 - will retailers start not accepting some card types if they worry about not getting their cash honoured (think worldpay 30 day sale to bank lead time)

4 - Visa & Mastercard - what exposure do they have to the crunch as if they go belly up ? Imagine your cashpoint debit card not working because Visa is belly up :cry ...... cash might be king but not if you cant withdraw it easily

5 - what if the sky falls in? (hehe okay but this is a doom and gloom thread )


globeandmail.com: Credit cards to ‘implode:' analyst
http://www.ft.com/cms/s/0/42c7a11e-6...0779fd18c.html

Not a good time.... :cry

[tbp]

Im not sure about Capital One going belly up. Although they lend to high risk people they've been a lot more stringent in who they approve in the last couple of years. They also only allow low credit credit limits until you have a proven record of paying. On top of that their interest rates are sky high, so they subsidise the people who don't pay with more on top.

Personally, I feel it would more likely be the banks credit cards that go belly up, as although its harder to get a card they let people rack up massive amounts of credit.

The companies that have actually lent to the city folks who were on massive wages and previously very little risk are going to get hit hard, as without their massive wages they can no longer afford the repayments on mortgages, school fees etc. With their houses becoming negative equity (apparently the price of london properties has dropped 25% the last couple of weeks, as people laid off are desperate to sell their houses), its many of those who are going to become bankrupt, rather than the ordinary people.

[tomj]

Gareth,

Disagree m8.

Cap1 have had one of the most indiscriminate customer aquisition strategies of any of the card companies over the years. From the scummy classic card with 39%APR to the Platinum 14.9% APR they have wanted it all.

Also dont think thats its just bankers who are at risk as they are the current headline redundancies.....its starting to happen all over.

http://www.wikinvest.com/industry/Cr...conomic_trends

Regardless of it being cap1, mbna or whoever.......the credit card market place will suffer in spectacular fashion!

Just read up on Visa and Mastercard, they seem to be doing okay

[tbp]

Cap1 have had one of the most indiscriminate customer aquisition strategies

I do agree that they used to be like that, and that anyone could get a card. But the last couple of years they seem to have cracked down a bit. Capital one actually turned me down for one of their "bad debt" cards, even though 2 other credit providers accepted me.

Do agree that the credit card market is going to suffer, and its not just bankers at risk. But the bankers typically have more debt than the average person (as they are allowed to borrow more), so the lenders are going to be hit more by them than by ordinary people going bankrupt.

[gerard]

I am not so sure they will belly due to the crdeit crunch but more likely to the new credit card clearing companies that are starting up.

I have just come back from a meeting with one of those and the figures being thrown around that can be deemed unenforceable are huge. How will companies like barclaycard/ egg/capitol one etc fair if over the next few months when so many claims are put forward that they have to pay on? not to mention the enormous manpower and resources it will take to counter the claims.

Although saying that it does seem a good opportunity to make some quick money by providing the leads