by Calculated Risk on 7/26/2009 12:49:00 PM

From David Streitfeld at the NY Times on credit card debt: When Debtors Decide to Default

[T]there is a small but increasingly noticeable group of strapped consumers who ... are deciding they will simply stop paying.

... They are upset — at the unyielding banks and often at their free-spending selves — and are pre-emptively defaulting. ... “You reach a point where you embrace the darkness of default,” said Adam Levin, chairman of the financial products Web site Credit.com.

The lending industry term for these people is “ruthless defaulters.” In a miserable economy where paychecks, savings and expectations are all diminished, their numbers will surely grow.

“They’ve done the math on their account and they’re very angry,” said Corey Calabrese, a Fordham Law student who is an administrator of the school’s walk-in clinic for debtors at Manhattan Civil Court. Public sentiment is on their side, she added: “For the first time, Americans are no longer blaming the borrower but are looking at the credit card companies.”

Streitfeld is writing about the growing wave of ruthless credit card defaults, but this also raises question about the credit card industry in general. Why aren't consumers being educated on the dangers of not paying off their credit card balance each month? Maybe that will be a good role for the new consumer financial protection agency. And why are transaction costs for retailers still so high with all the innovation and advances in technology?