Released: November 05, 2008

Credit card debt forgiveness for some benefits all

Source: David Lazarus, Los Angeles Times (Free Registration)

When I heard last week that banks want to forgive up to 40% of some customers’ credit card debt, my first question was, “What’s the catch?”

“There’s no catch,” answered Scott Talbott, chief lobbyist for the Financial Services Roundtable, an industry group that helped concoct the debt-relief program. “There’s no hidden agenda. These are extraordinary times and the industry is aggressively working to help customers.”

He’s half right. As best as I can tell, the banks’ offer comes with no strings attached.

However, this isn’t pure altruism. Credit card issuers would enjoy some significant benefits under the plan, making it an act of self-preservation that just so happens to be in the best interests of potentially millions of cardholders.

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