Today I read this most interesting posting from Mike Mish Shedlock at Minyanville.com on the upcoming Credit Card credit crunch problem. Here are some of the parts I liked the most:

  • Cash-strapped consumers are increasingly turning to charge cards and home equity lines to support consumption.
  • The holiday sales data indicated that consumers cut back in late 2007. But the consumer credit numbers would seem to indicate that they wound up further in debt anyway

  • Credit card debt rose at an annual rate 8.5% in October.

  • Credit card debt rose at an 11.3% annual rate in November.

  • Credit card debt rose at an annual rate between 2% and 4% from 2003 to 2005.

  • This past summer’s subprime meltdown involved about $900 bln in now-suspect securitized debt, reckless lending, and consumers who buckled under the weight of loans they couldn’t afford. Now another link in the consumer debt chain - credit cards - is starting to show signs of strain. And the fear that the $915 bln in U.S. credit card debt (an uncannily similar figure) may blow up has major financial institutions like Citigroup (C), American Express, and Bank of America strapping on their Kevlar vests. “This is absolutely not the next one to blow,” says Meredith Whitney, banking analyst at CIBC. Christopher Marshall, CFO of Fifth Third Bancorp in Cincinnati, points out that the U.S. has a long history of credit card securitization, “so it’s fairly well understood.” The securitization of the subprime sector, by comparison, “got blurry, and people didn’t focus on what it meant.”

And, here are the Weekly charts for some of the major credit card companies…

(click to enlarge)

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