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hegemony

Discovery charge off rate jumped to almost 4%

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What is the difference between delinquency rate and charge-off rate?

 

4% seems pretty high to me.  How can they turn a profit?

 

$870b in CC debt.  That's about $3,000 for every man, woman and child in the US.  Do you think that's actual debt carried over from month to month or does that include debt that's reported but actual PIF before payment due date?

 

 

 

 

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Posted (edited)
22 minutes ago, PotO said:

What is the difference between delinquency rate and charge-off rate?

 

4% seems pretty high to me.  How can they turn a profit?

 

$870b in CC debt.  That's about $3,000 for every man, woman and child in the US.  Do you think that's actual debt carried over from month to month or does that include debt that's reported but actual PIF before payment due date?

 

 

 

 

delinquency includes account in arrears (>=30 day late)

 

charge off are those that past the 180 day point and must be charged off (as an accounting mechanism)

 

profit from idiots who think in-country powerless CSRs matter more than benefits and rewards. also a lot of people carrying balances as discover caters to folks with marginal credit.

 

 

 

 

Edited by hegemony

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3 minutes ago, PotO said:

What do you make of the $870b in US CC debt?

 

not much. That probably includes what is reported not what is revolving. Ever if it is revolving, the fact banks are making profits is good for those of us who enjoy benefits and rewards. Further, remember during the last recession when idiots kept paying credit cards but stopped paying mortgages and auto loans.

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1 hour ago, hegemony said:

check out the interactive graph showing type of debt by generation. Why are so many people over 50 still carrying a mortgage?

 

https://www.wfae.org/post/commentary-millennials-are-1-trillion-debt-theyre-better-saving#stream/0

 

Can't speak for others, but at age 60, our after tax mortgage cost is 2.1%.  Hell if I'm going to liquidate investments to pay that off.  If I could get more money at that cost, I'd double up on it.  (FWIW, the mortgage is PIF at our approx retirement in 7 years).

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15 hours ago, hegemony said:

check out the interactive graph showing type of debt by generation. Why are so many people over 50 still carrying a mortgage?

 

https://www.wfae.org/post/commentary-millennials-are-1-trillion-debt-theyre-better-saving#stream/0

I looked at the graph and it showed a clear decline in the over 50 age groups.

 

50-59 - $2.2B

60-69 - $1.4B

70+ -    $0.72B

 

This bracketing seems perfectly normal. 30 year mortgage is by far the standard mortgage term in the US. Most people don't buy a house at 20. Even if they did, the vast majority will move or refinance prior to 30 years culmination of a purchase loan.

 

I don't know the exact statistic right now but the average homeowner moves approximately every 7 years. That does not take into account further "30 year clock resetting" from refinancing activities.

 

Also, as alluded to by hdporter, economic periods of lowish interest rates are conducive to holding mortgages.

 

Therefore, mortgages over 50 can be very logical.

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I don't care how "cheap" the money appears to be; riding oneself of what is probably the largest liability makes more sense if one doesn't want to work forever.

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27 minutes ago, hegemony said:

I don't care how "cheap" the money appears to be; riding oneself of what is probably the largest liability makes more sense if one doesn't want to work forever.

Many people with > 1M liquid assets also have a mortgage because of the low interest rates. But there are many that have zero or low liquid assets and high mortgage payments that go on after retirement. And that sucks.

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Posted (edited)
50 minutes ago, Kat58 said:

Care to elaborate on what this has to do with the topic at hand, other than a link to something that would be against the ToS?  

 

On second thought, don't bother.

 

You know better...

Edited by CTSoxFan

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3 minutes ago, CTSoxFan said:

Care to elaborate on what this has to do with the topic at hand, other than a link to something that would be against the ToS?

 

You know better...

 

1 hour ago, hegemony said:

I don't care how "cheap" the money appears to be; riding oneself of what is probably the largest liability makes more sense if one doesn't want to work forever.

 

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OK.  So you took a typo and made something dirty out of it.  So clever.  Now hopefully we can all get past the 3rd grade and come back to adult world.

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18 hours ago, hegemony said:

check out the interactive graph showing type of debt by generation. Why are so many people over 50 still carrying a mortgage?

 

https://www.wfae.org/post/commentary-millennials-are-1-trillion-debt-theyre-better-saving#stream/0

Few people stay in the first home they got as an adult.  And, sadly, the other element is that many in the 50+ category are in the range that was taught by the financial industry that the house was a piggy bank.  Factor in the element of those who bought a home in the mid-90's and then later refinanced to get a lower rate and it would not be difficult to be 50+ with a mortgage that still had several years before being burned...

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4 hours ago, hegemony said:

I don't care how "cheap" the money appears to be; riding oneself of what is probably the largest liability makes more sense if one doesn't want to work forever.

Are you having a "Dave Ramsey" moment? 😊

 

The opposite can be the case. Creating the largest liability can allow one to not have to work. Currently, I could NET 6%+ in semi-passive income on a considerable amount of 4%ish cash taken out on a fixed term mortgage,

 

 

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6 hours ago, hegemony said:

#10 is cool ...

 

But so is #3.  

10. Correct Mistakes

Author and TV host Jeffrey Hayzlett recommends on Entrepreneur if a troll points out a mistake you have made, then you should look into it, make the proper corrections, and admit that you were wrong. Hayzlett states:

“Let the person who wrote the complaint know you have corrected an error and explain what you did. Most times you’ll never hear from the person again, but I can guarantee the individual will appreciate that he heard directly from a company representative and didn't have to navigate an endless phone tree.”

 

3. Make Let Light of the Situation

Rachel Wisuri states on Social Media Examiner humor is one of the best ways to handle trolls. Wisuri uses Sainsbury’s, a grocery chain in the United Kingdom as an example of using humor to battle trolls after an unsatisfied customer reported that they had purchased chicken that tasted “like it was beaten to death by Hulk Hogan.” The brand replied by using a metaphor, as well as an apology. This was effective because the brand engaged the unhappy customer in a lighthearted manner.

As Rachel states, “When you make light of a troll’s tweet, you simultaneously acknowledge and defuse the situation.”

 

 

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On 3/17/2019 at 5:54 PM, PotO said:

4% seems pretty high to me.  How can they turn a profit?

 

$870b in CC debt.  That's about $3,000 for every man, woman and child in the US.

 

Because the typical cardholder has the math skills of a fruit fly, if that.

 

Discovery it APRs run from 14.24% to 25.24%, and I'm sure they harvest plenty of late fees too. Subtract 4% (1)

and it still looks pretty lucrative. Then add interchange fees...

 

(1) 
Net charge-off rate is calculated by dividing annualized net charge-offs for the period by average loans held for investment during the period for the specified loan category.
On 3/17/2019 at 5:54 PM, PotO said:

Do you think that's actual debt carried over from month to month or does that include debt that's reported but actual PIF before payment due date?

 

I'm sure it includes reported debt that gets PIF, but larger balances are less likely to be PIF, and how many consumers actually PIF for 2 months in a row?

 

 

 

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