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Credit Card Debt: Profit from the mortgage collapse

Posted April 9, 2008

“Evidence suggests that as adjustable rate mortgages (ARMs) reset to higher interest rates, consumers in these regions - and across the country - are relying more on their credit cards to finance such day-to-day living expenses as groceries and gasoline.” — Robert Williams

by Robert Williams

Baltimore – (TFN): Late credit card payments and outright defaults have soared in recent weeks. The most recent data says that “dead” balances written off as uncollectible by banks have jumped 24% from a year ago. Late payments are up 16%.

Can this be linked to the subprime mortgage meltdown? Our research says it is.

Nor is it much of a surprise. Since the subprime crisis broke last year, we’ve repeatedly predicted the fallout would spread to such other markets as credit cards and even auto loans.

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Citigroup Inc. (C), the third largest card issuer after Visa Inc. (V) and Mastercard Inc. (MA), said that the states hit hardest by the subprime fiasco - Arizona, California, Florida, Illinois and Michigan - experienced mushrooming levels of credit card delinquencies and defaults in the fourth quarter. In fact, those states accounted for two-thirds of the nation’s total credit card losses.

Credit Card Debt: It just gets worse

Evidence suggests that as adjustable rate mortgages (ARMs) reset to higher interest rates, consumers in these regions - and across the country - are relying more on their credit cards to finance such day-to-day living expenses as groceries and gasoline.

That’s not good. But read on to learn how the collapsing debt market could bring you gains .

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