A Kinder Credit Card Industry?

Given the data supplied by the Federal Reserve with respect to credit card debt 30 days or more past due, it is clear that credit card providers would be better served to accept a little — instead of a whole lot of nothing.

With unemployment quickly approaching double-digit levels, home foreclosure  rates continuing to rise, revolving credit quickly approaching $1.0 billion and credit card delinquency rates in excess of 6.0%, a few credit card companies now are willing to doing something they have historically abhorred to do — settle delinquent accounts for substantially less than owed.

This shift was a result of the credit card reform bill that was signed by President Obama in late May 2009, which moderates some of financial service industry’s ability to raise rates on existing balances and prevents certain automatic fees.

The practice quietly began during 4Q09, but had been expanded as the recession continued. Some of these credit card companies have revised their internal guidelines to give their “front-line” employees the power to make deals with consumers.

While Bank of America (BAC), HSBC (HSBC) and American Express (AXP) prefer to use a case-by-case approach, other companies are taking a preemptive approach and calling their customers first.

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Comment by Credit Cards Worldwide

2009-06-23 17:44:47

The credit card issuers are competing to get whatever money left on defaulters.

They hope by offering a better deal to settle the debt, consumers will be tempted to settle the credit card debt first.

It’s for sure better than total lost and treated as irrecoverable debt.

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