Bad debt is bad debt, but bad debt ratios are exasperated when good customers bail.See Below Providian also said it now expects to report a loss rate of about 10.33 percent for the quarter... http://biz.yahoo.com/rf/011012/n12312723_1.html VJ
In other words - at the moment - 10 out of a hundred Providian customers are not paying on time. Normally, a strict prime bank would allow maybe 2 out of a hundred. sure is a sign of our economy as well - other banks will see more people late. San Fran/San Jose Bay Area is at the nations highest unemployment levels - 5.2%! later - dogman
well it makes sense that they're losing money. The proven customers get high rates and no grace period. I have a perfect pay history on 3 cards and my card rates still suck. So they'll lose 2 of my cards on their anniversaries and I'll keep the visa for a while for ratios. I'll put 1 gas charge a month on it and pay it the day it hits the books so the grace won't affect me. they'll make NO money off me, no lates, annual fees rebated every time or I'll cancel. So, like George points out... you can reduce my rate and I'll use the card or not... and I'll give all my business to Cap1. I do love my 9.9 fixed cards. Cap1 deserves the profits they're posting... and Providian needs to take a lesson.
CAPITAL ONE..... No one has ever posted - that I remember anyway - that Capital One intentionally added fees or dumped charges or held payments to be late., the only real complaint people had is that they are conservative on limit increases. Providian used to have strings with 100 complaints an hour! Hope you are well, friend dogman
Dog, I think its important to note that bad debt is not just 10 out of 100 cardholders being 30 days late. If I had to, I'd guess its categorized by total debt being more than 90 days late.Maybe more. I seem to remember reading somewhere that bad debt must be written off in its entirely within either one or two years from original delinquency. Either way, expect changes. VJ
Great. That is the price they pay for trying to collect 23.9% rates from good customers. I closed my account about a year ago. Their stock has lost over 75% since then. Ha, ha. www.creditsense,com
Actually, financial instiyutions are required by law to chareoff debt at 180 days from the most recent payment. That law was passed due to the accounting gimmicks the S&L's used to hide problems inthe mid 80's. Analysts have been nervous about Providian for several months. It was disclosed last month that they don't handle bk's the way most cc companies do. Most companies book a bk as a loss the moment they receive notice of the filing. Providian waits 30 days. Not illegal but, not the norm either. Last week, under the amnesty thread, I posted a list of 4 subprime lenders with trouble and I said I wouldn't be surprised to see one of the 4 fail. I gotta say, Providian wasn't the one I had in mind. There is another subprime lender that is in worse shape than Providian. The subprime market is about to get a lot smaller.
