The Ignorant Investor
Ignorance Can't Stand in the Way of My OpinionWednesday, January 09, 2008
Credit Card Borrowing Up in November
I read this with the thought that modern credit card companies occupy the same position that loan sharks used to occupy in the old neighborhoods of Little Italy:
WASHINGTON - Consumer borrowing rebounded in November as credit card debt shot up by the largest amount in six months. The Federal Reserve reported Tuesday that consumer borrowing rose at an annual rate of 7.4 percent in November, far higher than the 1 percent rise in October.
The category that includes credit card debt surged at an annual rate of 11.3 percent, a six-month high, reflecting the fact that shoppers are continuing to rely heavily on their credit cards to finance purchases since home equity lines of credit have become harder to get.The use of 6-7% home equity loans to fuel consumption was bad enough, financial wise. It was like a man gradually selling off his organs in order to buy a new watch or a new set of clothes. But the higher rates of interest credit card companies make ongoing consumption far worse. It's like voluntarily contracting a particularly fast-spreading and deadly form of flesh-eating disease in the assumption that a doctor can come in a fix the problem with yet another injection of antibiotics.
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