For the last 20 years, the rates of delinquent and defaulted credit card debt have moved more or less the same way as those for national unemployment. But recently, banks have seen their losses decline even as joblessness remains a major economic problem.
The reason for this stark shift away from historical precedent is that many consumers who have been without a job for an extended period of time have likely been unable to pay off their credit card debt, and have been forced from the borrowing system, according to a report from Bloomberg.
"You can only charge off once," said Capital One chief executive officer Richard D. Fairbank during a recent investor presentation, according to the news source. "Someone who's been unemployed for three years, I can pretty much guarantee that long ago they said goodbye to their Capital One credit card."
Additionally, consumers who are unable to pay their credit card debt will take a huge hit to their credit score, meaning they are unlikely to qualify for new lines of credit.