Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Covid, Debt and Precious Metals - 3rd Jun 20
Gold-Silver Ratio And Correlation - 3rd Jun 20
The Corona Riots Begin, US Covid-19 Catastrophe Trend Analysis - 3rd Jun 20 -
Stock Market Short-term Top? - 3rd Jun 20
Deflation: Why the "Japanification" of the U.S. Looms Large - 3rd Jun 20
US Stock Market Sets Up Technical Patterns – Pay Attention - 3rd Jun 20
UK Corona Catastrophe Trend Analysis - 2nd Jun 20
US Real Estate Stats Show Big Wave Of Refinancing Is Coming - 2nd Jun 20
Let’s Make Sure This Crisis Doesn’t Go to Waste - 2nd Jun 20
Silver and Gold: Balancing More Than 100 Years Of Debt Abuse - 2nd Jun 20
The importance of effective website design in a business marketing strategy - 2nd Jun 20
AI Mega-trend Tech Stocks Buying Levels Q2 2020 - 1st Jun 20
M2 Velocity Collapses – Could A Bottom In Capital Velocity Be Setting Up? - 1st Jun 20
The Inflation–Deflation Conundrum - 1st Jun 20
AMD 3900XT, 3800XT, 3600XT Refresh Means Zen 3 4000 AMD CPU's Delayed for 5nm Until 2021? - 1st Jun 20
Why Multi-Asset Brokers Like TRADE.com are the Future of Trading - 1st Jun 20
Will Fed‘s Cap On Interest Rates Trigger Gold’s Rally? - 30th May
Is Stock Market Setting Up for a Blow-Off Top? - 29th May 20
Strong Signs In The Mobile Gaming Market - 29th May 20
Last Clap for NHS and Carers, Sheffield UK - 29th May 20
The AI Mega-trend Stocks Investing - When to Sell? - 28th May 20
Trump vs. Biden: What’s at Stake for Precious Metals Investors? - 28th May 20
Stocks: What to Make of the Day-Trading Frenzy - 28th May 20
Why You’ll Never Get Another Stimulus Check - 28th May 20
Implications for Gold – 2007-9 Great Recession vs. 2020 Coronavirus Crisis - 28th May 20
Ray Dalio Suggests USA Is Entering A Period Of Economic Decline And New World Order - 28th May 20
Europe’s Coronavirus Pandemic Dilemma - 28th May 20
I Can't Pay My Payday Loans What Will Happen - 28th May 20
Predictive Modeling Suggests US Stock Markets 12% Over Valued - 27th May 20
Why Stocks Bear Market Rallies Are So Tricky - 27th May 20
Precious Metals Hit Resistance - 27th May 20
Crude Oil Cuts Get Another Saudi Boost as Oil Demand Begins to Show Signs of Life - 27th May 20
Where the Markets are heading after COVID-19? - 27th May 20
Silver Springboards Higher – What’s Next? - 26th May 20
Stock Market Key Resistance Breakout Is Where the Rubber Meets the Road - 26th May 20
5 Ways To Amp Up Your CFD Trading Today - 26th May 20
The Anatomy of a Gold Stock Bull Market - 26th May 20
Stock Market Critical Price Level Could Soon Prompt A Big Move - 25th May 20
Will Powell Decouple Gold from the Stock Market? - 25th May 20
How Muslims Celebrated EID in Lockdown Britain 2020 - UK - 25th May 20
Stock Market Topping Behavior - 24th May 20
Fed Action Accelerates Boom-Bust Cycle; Not A Virus Crisis - 23rd May 20
Gold Silver Miners and Stocks (after a quick drop) Ready to Explode - 23rd May 20
3 Ways to Prepare Financially for Retirement - 23rd May 20
4 Essential Car Trade-In Tips To Get The Best Value - 23rd May 20
Budgie Heaven at Bird Land - 23rd May 20

Market Oracle FREE Newsletter

Coronavirus-stocks-bear-market-2020-analysis

Here’s a Trillion-Dollar Investment Opportunity for Those Few with No Debt

Companies / Credit Cards & Scoring Jun 22, 2016 - 02:42 PM GMT

By: John_Mauldin

Companies

BY TONY SAGAMI

Politicians and central bankers throw the word “trillion” around as if it were chump change, but a trillion dollars is a huge mountain of money.

A trillion is equal to a thousand billions (1,000 x 1,000,000,000).

1,000 = one thousand

1,000,000 = one million

1,000,000,000 = one billion

1,000,000,000,000 = one trillion


Here’s another way to look at a trillion dollars. If you earned $40,000 a year, it would take:

25 years to earn $1 million
25,000 years to earn $1 billion
25 million years to earn $1 trillion

Clearly, a trillion of anything is a lot. That’s why the headline below caught my attention.

Credit card debt will hit $1 trillion in 2016

Credit card watchdog CardHub estimates that American credit card balances will hit $1 trillion in 2016, a debt burden that has never been reached before, not even during the go-go days of the dot-com boom.

Not only are Americans borrowing more, they are paying it back at a snail’s pace. Americans added an astounding $71 billion in credit card debt in 2015 and repaid just $26.8 billion during the first quarter of 2016: the smallest first-quarter paydown since 2008.

Relative to Q1 2015: -23%

Relative to Q1 2014: -17%

Relative to Q1 2013: -18%

Relative to Q1 2012: -22%

Relative to Q1 2011: -18%

Relative to Q1 2010: -30%

Relative to Q1 2009: -160%

Disturbingly and surprisingly, middle-aged Americans hold the highest credit card debt. The average 45- to 54-year-old American owes $9,000 on credit cards—50% more than the average Millennial!

Student and automotive loans are already past the $1 trillion mark

But credit cards are just one part of the American debt binge. Total outstanding consumer credit (a measure of non-mortgage debt) increased by $13.4 billion to $3.6 trillion in April.

The biggest chunk is student loans, which make up 37% of outstanding consumer credit. Student-loan lending climbed to $989.6 billion in April and now stands at $1.26 trillion.

There’s that trillion-dollar number again!

Experian Automotive reports that open automotive-loan balances rose 11.1% in Q1 2016 and exceeded $1 trillion for the first time ever. Oops! Another trillion dollars!

Actionable investing ideas

Because you are reading this article, odds are that you’re not the typical American saddled with student and auto loans and/or credit card debt. You probably have little to no debt and lots of cash.

If that’s the case, let me brief you on some investing opportunities that lie on the lending side of those trillion dollars of debt.

Quick fact: the average interest rate on credit cards today is a whopping 15.19%.

Given that the national average for 1-year deposits is a measly 1.09%, it is clear that credit card companies are making lots of money.

The purest ways to invest in the credit card business are Capital One Financial Corp. (COF), Synchrony Financial (SYF), and American Express Company (AXP).

As a dividend lover, I would point out that Capital One Financial (2.2%) and American Express (1.7%) pay a decent dividend too.

If you think that I’m nuts and that the credit card business is a house of cards ready to tumble, you should take a look at PRA Group (PRAA). They purchase and collect defaulted consumer receivables in North America and Europe.

You see, even in these days of NIRP, ZIRP, and QE… there are still ways to turn lemons into lemonade. I share most of them in my free weekly newsletter at Mauldin Economics.

Subscribe to Tony’s Actionable Investment Advice

Markets rise or fall each day, but when reporting the reasons, the financial media rarely provides investors with a complete picture. Tony Sagami shows you the real story behind the week’s market news in his free weekly newsletter, Connecting the Dots.

John Mauldin Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules