Credit Cards Still Popular
November 22, 2007
Amid all the bad news currently surrounding the housing market there is some good news, and it pertains to credit cards, of all things.
Asset-backed securities by other types of consumer loans, such as credit card receivables, have not been as impacted by the credit markets as other industries have. That is good news but that could change if the broader US economy weakens much more and housing prices continue to fall. The bad news is some analysts anticipate the credit card sector to go south as soon as the beginning of 2008.
As of Sept. 30, there was over $920 billion in consumer credit card debt outstanding. Payment delinquencies are still low when they are compared with historical standards, but they have been increasing slowly over the past year.
“The consumer is being squeezed between lower home prices and higher energy costs, but the good news is that we’re not seeing an impact on the consumer,” said David Wyss, chief economist at Standard & Poor’s. “We haven’t seen problems in consumer loans outside of the mortgage arena. They still keep up their credit card payments and auto payments.”
There is some concern, however, that as adjustable rate mortgage resets begin to kick in homeowners with those types of mortgages may find it more difficult to pay both the home loan and their credit card bills