Credit Card debt forgiveness?

[zelmo]

As the push to bail out consumers who make bad decisions continues, how long can it be before the idea of wiping out credit card debt starts to pick up steam? The politicians saw that they can buy votes by promising to cancel student loan debt and they love to bash "greedy" corporations, in particular the banks. Some reparations proposals include cancelling debt; a much wider voter appeal would be to cancel the debt of those who finance their lifestyle at the "usury" rates charged on cards. Imagine the voter turnout such a proposal would generate!

I have always worried about bank stocks taking a hit due to credit card default and was a bit surprised we didn't see it during the COVID panic. After an initial drop in most stocks the worries didn't turn out to be justified as we moved from lockdowns to reopenings. In the case of credit card debt forgiveness I really doubt that the government would send a check to the banks to cover the amount owed. The banks would take the hit and the stocks would suffer.

[boneil]

Bankruptcy handles credit card debt. Banks simply write off the defaults, it helps them with taxes.

[apenland01]

Bankruptcy handles credit card debt. Banks simply write off the defaults, it helps them with taxes.

If they also allowed student debt to be forgiven in bankruptcy, the student debt bailout would be a non-issue. I'd rather see them allow it to be wiped out in bankruptcy than forgive the debt. It's not a fair deal for those of us who paid our loans over many years and sacrificed to do so....

[zelmo]

Bankruptcy handles credit card debt. Banks simply write off the defaults, it helps them with taxes.

Yes, that is the current procedure but it doesn’t buy any votes. Additionally there are at least some negative ramifications. In a full blown attack on capitalism it is more convenient to blame the banks and stick it to them.

[chopshop07]

Indeed, the consequences could be far-reaching, considering the sheer volume of credit card debt in modern societies. As someone who's had substantial credit card debt myself, managing debts responsibly holds the key rather than hoping for a blanket forgiveness policy that might destabilize the financial sector.

For those struggling with debts, re-evaluating spending habits and seeking professional help might prove more meaningful. I've been using advice from this San Diego bankruptcy attorney to manage my finances better, and it's helped me stay on track and avoid falling into the debt trap again. Their approach towards debt management has given me a fresh perspective and practical tools to handle my financial woes.

[tcesni]

As the push to bail out consumers who make bad decisions continues, how long can it be before the idea of wiping out credit card debt starts to pick up steam? The politicians saw that they can buy votes by promising to cancel student loan debt and they love to bash "greedy" corporations, in particular the banks. Some reparations proposals include cancelling debt; a much wider voter appeal would be to cancel the debt of those who finance their lifestyle at the "usury" rates charged on cards. Imagine the voter turnout such a proposal would generate!

I have always worried about bank stocks taking a hit due to credit card default and was a bit surprised we didn't see it during the COVID panic. After an initial drop in most stocks the worries didn't turn out to be justified as we moved from lockdowns to reopenings. In the case of credit card debt forgiveness I really doubt that the government would send a check to the banks to cover the amount owed. The banks would take the hit and the stocks would suffer.

Who is talking about “forgiving” credit card debt? Never heard of such a thing and neither state or federal governments are involved with credit card debt, and I don’t see why any bank would do so.

[The5thDutton]

Who is talking about “forgiving” credit card debt? Never heard of such a thing and neither state or federal governments are involved with credit card debt, and I don’t see why any bank would do so.

Neither state nor federal govt "should" be involved in student debt, either.
Not much different, really. Both represent a loan that the recipient applied for, recieved, and spent. Pay it back....

[boneil]

Neither state nor federal govt "should" be involved in student debt, either.
Not much different, really. Both represent a loan that the recipient applied for, recieved, and spent. Pay it back....

Kind of hard not to be involved when the Federal gov't is the one giving out the loans. The Feds have been involved in one form or another with student loans for decades.

[The5thDutton]

Kind of hard not to be involved when the Federal gov't is the one giving out the loans. The Feds have been involved in one form or another with student loans for decades.

I know they have been...... been that doesn't maybe it right or constitutional.

[tcesni]

I know they have been...... been that doesn't maybe it right or constitutional.

So you’d get rid of the FDIC too?

[B Holmes]

So you’d get rid of the FDIC too?

So you think I should pay for someone else’s bad decisions?

[RangerOKC]

So you think I should pay for someone else’s bad decisions?

tcesni, answer the question.

[tcesni]

So you think I should pay for someone else’s bad decisions?

I don't think you should pay for someone else's bad financial decisions on a personal level but we all contribute to paying for bad decisions on a societal level whether we approve of it or not.

[RangerOKC]

I don't think you should pay for someone else's bad financial decisions on a personal level but we all contribute to paying for bad decisions on a societal level whether we approve of it or not.

That is a non-answer. You cannot have it both ways.

[Charles Prestridge]

I think FDIC is totally different than credit-card or student-loan forgiveness.

FDIC is to protect “all of us” in the case of bank default, for our own deposits up to the limit.
FDIC discussions about Government bailouts for banks/stock holders is a different discussion.

My parents were born before the Great Depression. Many stories of families losing all their meager savings when banks failed after 1929 crash. This is what FDIC is meant to protect.

[tcesni]

That is a non-answer. You cannot have it both ways.

Sure you can. If a neighbor over spends, loses his job for poor performance and declares personal bankruptcy I feel no obligation to help him or her. If I am a close personal friend? That’s a tough call that I’ve never had to make. If my government makes a bad decision such as invading and occupying Iraq over WMD’s that did not exist and one of the results is thousands of veterans with life altering injuries that will have a long term cost in the billions of dollars then ask a tax paying citizen I am required to contribute to the cost of taking care of these folks.

[zelmo]

If my government makes a bad decision such as invading and occupying Iraq over WMD’s that did not exist

Never said in that argument is that Sadaam Hussein went to great effort to make the world believe that he had them. He also used chemical weapons on his own people. Isn't that a form of WMD? To think that he got rid of them before the invasion is either naïve or a weak talking point.

To the subject, as stated previously, the FDIC exists to proved a safety net if the bank fails. That could be due to bad decisions or just because stuff happens. Either way it is intended to keep folks from making a run on the bank and exacerbating whatever problem the bank is dealing with, not to bail out people making bad decisions.

I still won't be surprised if there isn't some form of credit card forgiveness floated as we get nearer to the 2024 election. Those balances continue to get higher as do the interest rates being charged. The logic used for a bailout will be "predatory rates" and the need to reign in the lenders. It would be shot down in the courts but will buy votes while that process plays out.

[apenland01]

Any credit forgiveness in any category will be aimed at the younger generations. They are the most influenced and will change their voting patterns to reflect whoever is pitching the forgiveness.

Abortion and forgiving various credit balances will dictate politics for the next few election cycles. Nothing else really matters....

[NitroZ7]

We are trying to tame inflation not stoke the flames of it. We want people spending less, we want higher unemployment and wage growth, we want bankruptcies in zombie companies, we want the real estate market to fall. This is all part of a cycle and the longer you artificially keep a cycle going then the worse the fall will be. We needed to have the recession during the pandemic but they stepped in on the fiscal side and monetary side and created the monster we have today. We could now end up with a recession and inflation (stagflation) and people will really be hurt by that more than simply taking the recession which we deserved. Nobody knows where this is headed but with a lack of demand in the long term bond auctions we may see rates on the long end stay higher then most think and the interest we are paying as a country will be immense. We may see higher tax rates, changes in social security and all kinds of changes if we hit the wall and that will not be pretty. I would hate to go through the austerity measures that Greece went through about 15 years ago.

[B Holmes]

I don't think you should pay for someone else's bad financial decisions on a personal level but we all contribute to paying for bad decisions on a societal level whether we approve of it or not.

Society didn’t create the credit card or student loan debt. Individuals did by there own choice.
I make choices every day. Not once have I expected someone else to cover my ass for for my own poor decision.