I do not think this is Chase' directive or plan, but there was a "forced" agreement through the congress/fed govt I believe that charge card issuers would require higher minimum payments each month, because some people were owing more each month, because they were not even keeping up with the interest payments on their cards. I think EVERYONE is requiring much high minimum monthly payments, as a result.
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JP Morgan Chase Setting Up For Massive Credit Card Default Problem
- Thread starter pspr
- Start date
I do not think this is Chase' directive or plan, but there was a "forced" agreement through the congress/fed govt I believe that charge card issuers would require higher minimum payments each month, because some people were owing more each month, because they were not even keeping up with the interest payments on their cards. I think EVERYONE is requiring much high minimum monthly payments, as a result.
Quote from the1:
However, there are things like inflation and medical costs, and my fucking furnace blew up, and burst pipes, and, I know I already mentioned it, inflation. Every dollar of credit that is created causes inflation and even if a consumer doesn't want to use debt to get by they frequently have no choice.
How does inflation hurt consumer debt? Sure things cost more, but theoretically wages increase by the same amount, and the amount of debt you actually owe decreases. Inflation helps consumer debt.
Quote from TraderZones:
I do not think this is Chase' directive or plan, but there was a "forced" agreement through the congress/fed govt I believe that charge card issuers would require higher minimum payments each month, because some people were owing more each month, because they were not even keeping up with the interest payments on their cards. I think EVERYONE is requiring much high minimum monthly payments, as a result.
Regulators are asking credit card issuers to raise minimum payments on new charges to 3% or 4%. Chase is using this request to go overboard in trying to get cardholders to default on existing low rate promotional balance transfers so they can jack the rate to 19% to 29% on these lower rate balances. This has been the norm for Chase in these cases.
Quote from Kassz007:
How does inflation hurt consumer debt? Sure things cost more, but theoretically wages increase by the same amount,
LOL!
The key word is "theoretically"
Theoretically, corporations really really care. Theoretically, the politicians are honest and are there to represent and work for the people. Theoretically, CHANGE will come and make everything fine, because Obama & the media said so.
Quote from Anaconda:
LOL!
The key word is "theoretically"
Theoretically, corporations really really care. Theoretically, the politicians are honest and are there to represent and work for the people. Theoretically, CHANGE will come and make everything fine, because Obama & the media said so.
I don't think theoretically corporations care. I don't think theoretically politicians are honest. And just because someone says something doesn't make it theoretical.
I'm not sure if it is required by law or not, but in Canada, employers typically give annual minimum 2% wage increases. Admitedly, my evidence is anectdotal based on my own experiences and the experiences of those I know, but 2% annual wage increases are the norm rather than the exception. In this country anyway.
Quote from Kassz007:
How does inflation hurt consumer debt? Sure things cost more, but theoretically wages increase by the same amount, and the amount of debt you actually owe decreases. Inflation helps consumer debt.
In actuality, wages lag inflation. Low inflation is considered a good thing to help growth. However inflation aproaching double digits reaks havoc on those on fixed incomes like the elderly. Obviously, those with leveraged hard assets that appreciate with inflation make money. In past inflationary periods the leverage offered by real estate has presented high returns but eventually higher interest rates put new investors in real estate at risk of debt eating the gains or worse, adverse price moves and high debt service costs.
Quote from pspr:
In actuality, wages lag inflation. Low inflation is considered a good thing to help growth. However inflation aproaching double digits reaks havoc on those on fixed incomes like the elderly. Obviously, those with leveraged hard assets that appreciate with inflation make money. In past inflationary periods the leverage offered by real estate has presented high returns but eventually higher interest rates put new investors in real estate at risk of debt eating the gains or worse, adverse price moves and high debt service costs.
Yes the theory goes out the window if double digit inflation hits. But lets remember, we are not even in an inflationary period, let alone double digit inflation...A lot of people speculating on inflation and even hyper inflation, but the fact still remains that there is currently <b>no</b> inflation.
Quote from pspr:
Regulators are asking credit card issuers to raise minimum payments on new charges to 3% or 4%. Chase is using this request to go overboard in trying to get cardholders to default on existing low rate promotional balance transfers so they can jack the rate to 19% to 29% on these lower rate balances. This has been the norm for Chase in these cases.
No, it is on the ENTIRE monthly balance:
Forced to Pay More Every Month ...
"Millions of consumers who carry monthly balances are getting hit with higher minimum payment requirements as card issuers start implementing guidelines issued by the Federal Reserve, the Office of the Comptroller of the Currency and other federal regulators.
The companies require that minimum payments go toward monthly interest charges as well as toward the principal. Instead of paying a 2 percent minimum, consumers will be required to pay at least 4 percent each month.
I think you're missing the point. Consumers get into debt because of inflation and inflation is caused by the expanding money supply and part of that money supply is available credit. If you use no credit but 99% of your neighbors do then prices will still go up for you. Since wages do not keep up with inflation at some point you will be required to used debt because you run into some unexpected expense like a medical bill so even though you may be a conservative consumer who lives within his/her means you may still end up in debt because of reasons beyond your control. Not all consumers who run into money trouble do so because of the Benz in the driveway. Often times it's to buy asthma inhalers or insulin.
Quote from Kassz007:
How does inflation hurt consumer debt? Sure things cost more, but theoretically wages increase by the same amount, and the amount of debt you actually owe decreases. Inflation helps consumer debt.
Quote from the1:
I think you're missing the point. Consumers get into debt because of inflation and inflation is caused by the expanding money supply and part of that money supply is available credit. If you use no credit but 99% of your neighbors do then prices will still go up for you. Since wages do not keep up with inflation at some point you will be required to used debt because you run into some unexpected expense like a medical bill so even though you may be a conservative consumer who lives within his/her means you may still end up in debt because of reasons beyond your control. Not all consumers who run into money trouble do so because of the Benz in the driveway. Often times it's to buy asthma inhalers or insulin.
Exactly what I and many others have been saying:
The fractional reserve credit system is unsustainable and bubble-prone.
You have 10 people in a community and 10 houses each person currently has $1,000 and makes that much each year. Each house costs $10,000. Let's say you want to wait 5 years to generate some savings before making a down payment on a house. The other 9 people take out 0-down mortgages to buy their houses. Suddenly, the quantity of money out there jumps by $90,000, a 900% increase. This money is paid to the house-makers, which circulates around the economy and eventually boosts everyone's wages PARTIALLY (labour is not entirely elastic).
However, before the boost in the money supply can even partially affect your wage, 5 years passes and you've saved a measly $5,000 to put a down payment on the $10,000.
Except by now, the money created by previous credit-transactions has shown the house-makers what kind of demand there is in the market and the prices have increased ten-fold.
Prior to 1980, when banks weren't as significantly entrenched in the housing market, house prices only grew about as fast as household savings.