Home > News & Commentary > Consumer Credit Card Debt Levels (JPM, BAC, V, MA)

Consumer Credit Card Debt Levels (JPM, BAC, V, MA)

How is the consumer supposed to recover and drive the 70% of GDP s/he accounts for when s/he is buried under a metaphorical mountain of credit card debt?

The Market Ticker blog has a great post about how consumers are struggling under a mountain of credit card debt, and the disastrous effects this will have on the V-shaped recovery the market seems to have already predicted.

While I disagree with the high interest rates on which the author, Karl Denninger, bases his calculations, even if you divide his figures in half you still come up with a problem.  And certainly you would be counting your lucky stars if you were one of those people paying only 10-15% on your credit card.

Banks such as JP Morgan Chase (JPM) and Bank of America (BAC) have been increasing their consumer loan loss provisions as they predict more trouble ahead in that sector.  Credit Card giants Visa (V) and Mastercard (MA) could see trouble if consumer sentiment shifts and people start using their cards less. Perhaps the market should take those warnings into consideration as it ponders which direction to choose after making new 52 week highs.


Disclosure: Long JPM, no other positions in stocks mentioned

  1. No comments yet.
  1. No trackbacks yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: