Credit Card Comparison Blog

2009 Credit Card Forecast

Banks and credit card companies have begun to realize how dangerously close to the edge they got when it comes to credit cards. These companies offered too many sneaky practices and consumers took advantage of the opportunity to have too many credit cards.

Over the past few years, the country’s economic state has been sliding into oblivion. What has been the main culprit? The misuse of credit cards.

Let me first say that credit cards CAN be a very beneficial asset when used correctly. When consumers use their credit cards responsibly, and practice money management their credit score can be increased drastically and quickly. However, too many people have gotten too used to misusing their credit cards.

Financial experts have predicted that the number of credit card defaults will increase by more than 10 percent in 2009. This huge increase in defaults proves to have a major affect on lenders’ annual profit. In fact, these defaults could demolish annual profits by more than 55 percent.

As people continue to face job layoffs, they continue to use their credit cards unwisely. Gas, groceries and other necessities are purchased with plastic. When it comes time to pay the minimum balance (let alone pay off the entire balance), consumers can’t come up with the cash.

Credit card charge-offs are looking even worse for 2009. A charge-off is when a lender deems the debt to be completely uncollectable. The number of charge-offs that are expected in 2009 is an extremely alarming number. The percentage of 2009 credit card charge-offs could reach more than 15-16%.

Credit card companies are trying to raise interest rates in order to combat the rising number of defaults and charge-offs. They can’t keep this up for long though. The U.S. Federal Government has signed new legislation that prevents these practices. However, the legislation won’t take affect until 2010.

The entire credit card situation does not look very promising for 2009. However, you can reduce the number of defaults and charge-offs by using your credit card responsibly.