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Money Talks blog: Credit card pain?
Is there a scandal waiting to happen with packaged credit card debt, similar in scope and nearly so in depth, to the sub-prime crisis we are still neck-high in? Some have even called it the perfect storm.
In the current financial climate rumours upon rumours abound. But some alert analysts are privately saying that credit card providers, who embarked on off-balance sheet SPVs similar to the sub-prime mortgages a few years ago, with the enthusiasm of a rampant ram, are now finding that this inventive piece of financial engineering is now coming back to haunt them.
The bottom line is that although the number of credit card defaults is low, numbers are still rising, and borrowers are financially savvy enough to know that in times of crisis unsecured debt should come bottom of their repayment plans.
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