tag:blogger.com,1999:blog-2826531655042170344.post1335020735484619314..comments2024-03-26T11:29:52.986+00:00Comments on Economic Incentives: Credit Cards in 2010Seamushttp://www.blogger.com/profile/15679299530222667673noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-2826531655042170344.post-6187237333401718932011-02-18T06:56:48.391+00:002011-02-18T06:56:48.391+00:00Credit card is a type of unsecured financing. The ...Credit card is a type of unsecured financing. The consumer uses the card to purchase which is considered as debt. The flow is like this. The bank pays in advance before we could even purchase or buy something with our card. So, if we do not pay at the right time then the bank would have a deficit or unbalanced accounting on their part. Then, because of that we pay not only for the item price purchased but also for the interest that we agree to pay if it was overdue. It is unsecured because we are granted to borrow without collaterals to secure as payment for the bank if we would not have the capacity to pay anymore.John Lairhttp://www.merchantcashadvance.com/article/unsecured-financing-loans.phpnoreply@blogger.comtag:blogger.com,1999:blog-2826531655042170344.post-43041954372748563112011-02-11T18:35:29.504+00:002011-02-11T18:35:29.504+00:00Seamus, I don't think that the HBOS figures ac...Seamus, I don't think that the HBOS figures actually make much of a difference to the trends you have discussed above. Any transfers to the parent were purely residual as personal customers had already been advised of the closure of the Irish operation & told to transfer their business elsewhere long ago. <br /><br />Spending on personal cards fell by 11.3% against December 2009 and any minor technical changes because of HBOS does not influence that. Credit card spending is not restricted by weather, indeed bad weather is a boon for internet shopping, for which a credit card is a pre-requisite. The bad weather should be reflected by greater use of credit cards, not less as people used the internet to buy presents instead of venturing from their homes <br /><br />I would suggest that the switch to 31/12 account year ends by the two main CC issuers AIB & BofI may have more to do with the decline in numbers as business units looked to make appropriate bad debt provisions. It would be interesting to know how many of the cards were cancelled by the issuer or voluntarily handed back. Also how much outstanding debt was written off or converted or “consolidated” into loans on cancellation. For example looking at the accounts of some Credit Unions for 2010, consolidation loans accounted for a reasonable amount of new business written. <br /><br />Personal spending is back to the levels of Dec 2004 and I would feel is likely to decline further during 2011. The balance outstanding (owed) is now “just” 3.37 times the monthly expenditure. But indebtedness as a multiple of spending and also in real terms is falling very slowly. This would seem to suggest that those who managed their cards efficiently and pay off their balances have cut back the most on their use with the others desperately trying to manage their debts and living costs. <br /><br />Credit cards are used by many Irish people for their regular out of pocket purchases or "Froopp"(Frequent regular out of pocket purchases). As such purchases on credit cards represent a large proportion of personal expenditure. A drop in credit card activity represents a decline in overall consumer activity. A decline in credit card numbers represents a serious decline in the confidence levels of both the issuing banks and consumers for the future. It also reflects the closing off of access to short-term borrowing for a very large number of people. <br /><br />Recent actions by MBNA forcing customers who do not clear their bills to make substantially higher minimum payments in the future will continue those trends. <br /><br />All of these points would seem to suggest that consumer spending in 2011 is going to be very weak indeed. <br /><br />A minor technical point. I would suggest that the payments made in a particular month should be compared to the previous month's spending as that is the reference point for the payment. <br /><br />Might I also (respectfully) suggest that you post some of these excellent commentaries on other sites such as Progressive Economy. They deserve a wider audience. A number of those contributing there have made regular references to your work.Niallnoreply@blogger.com