American Express has just announced quarterly profits significantly lower than originally expected, leading to a fall in the share price.
The company saw profits down by a massive 38 percent and, accompanied by a warning for the future that earnings per share would be on the decline, shares traded 11 percent lower. Even though American Express is more closely aligned to wealthier clients they have still seen defaults climb as the United States mortgage problems have hit people at all levels.
An American Express spokesman explained that the organisation, though performing very well relative to other players in the market, is behind where it expects itself to be and this is a situation that could continue for some time.
The worldwide credit squeeze is beginning to affect UK borrowers now, with holders of MBNA credit cards seeing interest rates climbing.
It seems that MBNA are trying to recover their losses in other markets by really pressing credit card clients, in some instances simply doubling the interest rate payable and then levying additional payments when accounts have got into difficulties.
The bottom line is that banks like MBNA can do whatever they choose with interest rates when they are classed as variable, which all credit cards are. Right now it looks like the UK borrowers are paying for the difficulties in the USA, literally. A typical example is of a lady who had never missed a payment and was what would be categorised as an excellent credit risk. Her rate went up within a couple of months from just under 16 percent to almost 28 percent. Knowing someone has the means to manage their credit and will pay the extra cost is no justification for doing so.
In a study carried out by Saga Insurance it has been found that the younger generation, especially males, are more likely to fall victim to credit card fraud.
Men under 50 are more likely to have several credit cards, making any fraudulent activity much harder to spot. It has also been shown that this sector of the market tend to carry themn all with them in their wallets. A Saga Insurance spokesman felt this was a worrying situation and urged people to take more care over their statements and also where they keep the cards.
He added that the younger consumer was probably less worried about credit card fraud, feeling it would not happen to them. However it has been shown that it can and does happen to people just like them so Saga Insurance are hoping the message will get through.
