Credit Cards, some interesting facts that I have been reading
You see it all over the news, about credit card debt and their companies and how everyone is over-leveraged. I was reading an article and it had said that in 2007 there was more than 18 Billion collected in penalties and fees, that is NOT the interest that is being paid, that is purely above and beyond principle and interest collected. Wow, that number is staggering, where as in 2008 there was 951 Billion in outstanding credit card debt according to the article. So that means they collected 2% of their investment in just fees. With the return on capital ranging from 9-31%(interested paid). They are racking up some serious cash. But then you have to factor in defaulted loans, now don’t quote me on this, I had read somewhere a few months back, that companies were seeing 4-7% default rate, at this point that could be worse. But there must be some risk manager crunching numbers somewhere letting them know how far they can stretch it until the breaking point. I am seeing money being offered, and in some cases it makes sense to take advantage of such offers and others it doesn’t. It is just like everything else, as long as you know what you are signing up for and it makes sense by a break-even analysis, then you should be taking advantage of it. I just had a client email saying she was offered a deal for 12 months, the break-even analysis she did (made me very proud that she has learned from me), that it would pay for itself in 3 months. That there is a good deal, and my client knew it because she was knowledgeable and willing to take a look at the deal that was offered. Remember all deals are not treated the same and all deals don’t make sense. But there are still deals out there and still money being offered.
