Credit Cards Follow Sub-Prime Mortgages in Downturn

Seems in addition to defaulting on mortgages, people are now "defaulting" on their credit card payments.

via The Big Picture:

"US consumers are defaulting on credit card payments at a significantly higher rate than last year, raising the prospect of problems in the stricken US subprime mortgage market spreading to other types of consumer debt.

Credit card companies were forced to write off 4.58 per cent of payments as uncollectable in the first half of 2007, almost 30 per cent higher year-on-year. Late payments also rose, and the quarterly payment rate - a measure of cardholders' willingness and ability to repay their debt - fell for the first time in more than four years."

But one "analyst"/columnist doesn't seem fit to worry:

"But it is not clear that the borrowers defaulting on their credit cards are the same people defaulting on their subprime mortgages, it added. This is in part because underwriting standards in the credit card sector have been more robust than in the mortgage industry.Also, many highly leveraged subprime borrowers, with little or no equity in their homes, may choose to default on a mortgage before losing their credit cards."

Yes, you read right: "underwriting standards in the credit card sector have been more robust than in the mortgage industry."

How many of us have received pre-approved credit cards in the mail? How many people have successfully gotten credit cards for their dogs?