Credit card defaults result in losses for American Express
Financial giant American Express reported recently that an increase in credit card defaults had resulted in a 6% decline in its first quarter profits.
Officials stated that there had been a rise in the number of people failing to make repayments on their cards, and this had impacted significantly on its losses for the first quarter. However, whilst profits for the quarter did fall significantly the losses were not as bad as those that had initially been forecast.
The losses incurred by the financial giant have mainly been in the United States, and the economy and financial climate in the States at present means that losses from defaults had been expected, as many struggle to keep up with their repayments.
American Express officials have stated, however, that the losses incurred as a result of defaults in America had been counteracted by encouraging performance overseas.
The chief executive of American Express stated: “While we continue to be cautious about the US economy, we are encouraged by our performance internationally.”
In the meantime consumers within the UK continue to also battle to keep on top of their debts and financial commitments, and a recent report has shown how credit card providers have continued to hike up rates and fees on cards over recent months despite the three recent base rate cuts.
This could result in an increase in the number and level of defaults in the UK, particularly given the other living cost rises that consumers have had to factor into their budgets. The situation is likely to be made worse by the recent abolition of the ten pence tax bracket, which could see those on lower incomes even worse off.
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