It seems credit cards are getting a lot of attention these days. In the headlines, Bank of America reported that it losses climaxed through these past third quarters. Bank of America is the major bank in the United States that has presented the record loss rate for credit cards amongst the prevalent lenders.
Probably the biggest reason ties to the subprime borrowers, which cost the bank to lose 1 billion dollars quarterly. According to the bank representatives, they noticed a drop in charge-off rates in which they did not expect reimbursement. Was it the subprime borrowers to blame or the bank’s willingness to offer subprime loans that lead to such a huge loss?
Default rates for Bank of American stands at 10%. Many of the United States credit card providers reported this month that their default had feel during September. It dropped from record high when consumers began using their tax refunds and stimulus to lower their debts. Yet, late fees increased, which pointing to more problems.
The bank believes that if they can be more selective with whom they give credit cards too that this will all change for them in the future.
