Credit Card Indicators Are Singing The Blues

Recent data demonstrates that consumers are not paying their credit card bills in a timely fashion.  The credit card charge off rate was up to 5.59% in February 2008.  Now, we have all heard that you can get a statistic or a politician to say pretty much whatever you want them to say, but this is, in my opinion, a little different.  This statistic represents what I have been blogging about for a while now, and that message is simple, hold onto your cash because we are in for a rough ride in the future.  Again, in my opinion, this statistic will continue to rise as the so-called credit crunch continues to expand its tentacles. 

Additionally, if that wasn’t enough, we also learned that fewer consumers are paying off their monthly credit card balances.   These are the consumers who routinely pay off their monthly credit card bills at the end of the month.  Why?  You may be asking yourself the exact same questions that I am.  Where did we go so wrong that even the people who pay off their balances at the end of the month are now starting to carry balances? 

All I can say is that in Southwest Florida, things are getting tough.  Gas prices, property taxes, auto insurance & homeowners insurance are sky high.  The only bargain in Southwest Florida right now is the housing rental market because there are so many distressed homeowners trying not to lose their homes.  All in all I’ve heard the news reports that people are paying theri credit cards and not their mortgages, but I never really put too much stock into those stories because it was the exact opposite of what my clients were telling me.  My clients are telling me that there is no real work to be done, and therefore, they cannot make the money that they were making prior to the recession.  Accordingly, they cannot meet their monthly obligations.  Lastly, they are losing hope that a recovery or turn around will happen fast enough to save their sinking ships.