Credit card bond spread widen to record

Credit Card Bond Spreads Reach Record Over Benchmarks (Sept 2 - Bloomberg)


Sept. 2 (Bloomberg) -- Yields relative to benchmark rates on securities backed by credit card debt rose to records amid concern that falling household income will curtail spending and make it harder for consumers to pay their bills.

Spreads on credit card asset-backed securities of different ratings and maturities rose by 10 basis points to 50 basis points during the week ended Aug. 28, according to JPMorgan Chase & Co. Credit card bonds rated AAA and maturing in five years rose 15 basis points from the week earlier to 150 basis points more than the benchmark swap rate, analysts led by Christopher Flanagan in New York wrote in an Aug. 29 report.

Investors are retreating from securities backed by credit card loans following a slowdown in consumer spending, which accounts for more than two-thirds of the U.S. economy. Delinquencies are rising as Americans rely more on the debt to cover expenses because falling home values are causing banks to restrict access to home-equity lines of credit.

Here is yet another indication that the economy is neither expanding nor is in particularly good shape. Virtually every class of debt I have looked at reveals signs of stress. Yet the airwaves are full of the words “bottoming,” “bottom,” and “recovery,” even as housing, credit, and consumer markets remain weak, if not deteriorating.

Don’t fall for it.

This is a companion discussion topic for the original entry at

I’ve been trying to build my savings and cut down on my credit card debt for a year, but I haven’t been able to make much progress. Does anyone have a suggestion or tips on how to manage my debt?

 I can tell you what I did, but I did not do it by myself.
I had not only some credit card debt, but high interest rates and was having a hard time briging any of it down.  I had sacrificed my own credit over the years to help my kids get through rough spots, but was swamped and couldn’t get out of it.

Well my son, who by this time had finished his MBA and had perfect credit, devised a plan for me.  He lent me the money interest free to pay off those bills, and I arranged direct payment to him from my bank account.  In one year I had paid everything off and haven’t used a credit card since.

I have absolutely no sympathy for Bank of America or Citibank.  I think my interest payments were up to 24 percent at one time–that should have been illegal.  I was working long hours, helping adult children,  raising grandchildren,  paying for a vehicle,  and trying to keep my house from falling down around my shoulders.  Fortunately, those adult children are now responsible and are willing to help me out now that they are on their own two feet.

It is liberating to be debt free.  

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<![endif]–>I’m trying to be really good and save this year by paying only cash and not putting gifts on my credit cards - wish me luck!

I used Dave Ramsey’s technique. He has a radio show and a great website/
My husband and I were both married to spendthrift finacial idiots who ran us ino huge debt, and we both paid it off and refuse to go into debt ever again. It’s a hot-button issue for us.

It’s actually helpful and thrifty to be a prepper. Hubby saved oodles of money by learning to use a straight razor,  which is  by the way more environmentally friendly and sustainable. He also saved a great deal of money back when he was a smoker by rolling his own cigarettes (a cop once remarked it was the first time he’d ever seen a cigarette roller used for it’s intended purpose.)  I save money on fresh veggies and fruits by gardening, suburban foraging (the neighbor’s pears were going to waste so I canned htem), and buying local produce at the farmer’s market. All of our furniture (and the place looks nice, for values of nice that my decorator sister-in-law admires) with thrift store, garage sale and Craigslist finds. I learned to shop for clothes on the thrift store and clearace racks, and learned to mend and sew…

Be very careful in choosing a debt consolidation firm: some are good, others are a scam. The biggests advice I can give to anyone trying to save moeny is to put together a budget. Private message me and–if you have the ability to use an Excel spreadsheet–I will send you a model budget. And get a little notepad to track your spenidng, every dime of it for at least a month. This will enable you to see where you can easily trim your spending. You will find that you get your biggest bang-for-the-buck by not eating out.

Yes, paying off credit cards is hard but hopefully doable.