"Proactive credit line increases" (PCLIs) are when your credit card company increases your credit limit without your asking for it; it was very common prior to the 2008 crisis, but the post-crisis rules largely put a stop to it. Now, banks have figured out regulatory loopholes that allow them to throw PCLIs at their most vulnerable customers, leading to record-high national levels of credit-card debt of $880b as of last September, higher than the pre-crisis high.

Credit cards are the most profitable loans that the finance industry originates, and 2019 was the best-ever year for the banks' profits from credit cards, with interest rates soaring to a 20-year peak. The US banks made $179b in credit card fees and interest in 2019, and 2020 is projected to be even better. Credit-card debt is the fastest-growing form of debt in the USA.

Much of this PCLI activity is subprime -- extending credit to people who are already overburdened by debt and who will likely miss payments, leading to high penalties, which are extremely profitable for banks.

The number of people aged 19-29 in the USA who are more than 90 days late on their card payments just reached a ten-year high.

But after the stock slipped in 2017, [Capital One] executives came under pressure to show they could meet growth targets. They eventually tweaked their models to offer increases to more customers, betting on a quirk in human behavior, according to the person with knowledge of the decision, who asked not to be named discussing the talks. The firmsanalyses showed people tended to keep their card utilization steady, even after line increases. In other words, someone who used 80% of their credit line before the boost, would typically use the same percentage afterward, generating more revenue.

Other researchers had come to similar conclusions. For consumers who carry balances on their cards, nearly 100% of an increase in credit limits eventually becomes an increase in debts, according to a working paper by Scott Fulford and Scott Schuh for the Federal Reserve Bank of Boston. About half of U.S. credit card accounts carry a balance each month, the CFPB said.

Banks Are Handing Out Beefed-Up Credit Lines No One Asked For [Michelle Davis/Bloomberg]

(via Naked Capitalism)

Bernie Sanders commissioned the Government Accountability Office to study the consequences of the high degree of indebtedness borne by Millennials; the GAO's report concludes that Millennials dreams are being "crushed" by debts -- primarily student loans -- which have limited their abilities to seek good employment, good housing, and to save for retirement.

Modern Monetary Theory (MMT) (previously) is an alternative to neoclassical economics that holds that sovereign states that issue their own currency can't default on debts denominated in that currency (if you are the sole source of Canadian dollars and all your debts are in Canadian dollars, you can always pay those debts), and that deficit []

Robert Skidelsky is an eccentric British economist: trained at Oxford, author of a definitive three-volume biography of Keynes, a Lord who sat with the Tories as their economics critic during the Blair regime, who now sits as an independent who is aligned with Labour's left wing. Back in September, Yale University Press published Skidelsky's latest []

Its no secret that learning about data analytics is one of the best things you can do for your career in an increasingly data-driven world. Through five courses and over 70 lessons, the Data Analytics Expert Certification Bundle will give you the skills you need in order to become your companys go-to numbers guru, and []

Anyone whos ever been fishing can attest to the fact that it can be mind-numbingly boring at times, which is where the intrepid GoFish Cam Wireless Underwater Fishing Camera comes into play. This WiFi-enabled camera will help you catch more fish and have more fun while youre doing it, thanks to a 1080p lens that []

Boxed wines have come a long way since their admittedly subpar debut, and its now possible to grab a box of wine that delivers a surprising amount of flavor and body for a price that wont break the bank. This Boxxle Premium Wine Dispenser makes it even easier to enjoy your favorite bag-in-box wine by []

Originally posted here:
Banks have returned to the pre-2008 world of automatic credit-limit increases for credit cards used by already indebted people - Boing Boing