Local card banks contacted for this story declined to comment on their financial outlook or the possibility of layoffs, but experts believe weak earnings will linger in the short term, and might even pose some long-term challenges to the industry.
“The increase in delinquencies in credit card debt is a major cause for concern,” said Robert Dye, senior economist for PNC Financial Services Group in Pittsburgh. “The scale is not as big as the home mortgage problem, but it definitely adds stress to the financial services industry at a time when they don’t need any more stress.”
Some are even predicting a fundamental change in mindset toward debt, prompting consumers to put off purchases, buy less-expensive substitutes, eat out less, and rethink their propensity to do so on credit. Consumer borrowing fell for the first time in more than a decade in August, the Federal Reserve reported last month. The decline, at an annual rate of 3.7 percent, reflected a sharp drop in the category of borrowing including auto loans and a smaller decline in the category including credit cards.
Last week, the digital-market analysis firm comScore.com, said that credit-card applications at the top 10 online sites dropped for the first time in the past five quarters, dropping 6 percent year-over-year in September. Last year at this time, applications were up 26 percent year-over-year. Consumers are doing all they can to take out additional lines of credit, comScore.com Vice President Jennifer Lanouette said.
Source: Next big worry: Credit cards
- Strategic Financial Solutions and Ryan Sasson Stumble and Get Pounded - February 13, 2024
- These Emotions Stop You From Getting Out of Debt - January 11, 2024
- 16 Common Myths About Getting Out of Debt That Everyone Gets Wrong - January 8, 2024