The Next Wave of Bankruptcies

Banks have lost over $680 billion because of the huge wave of foreclosures that has hit the market over the past two years. And losses are beginning to ratchet up somewhere else, too: consumer credit card charge-offs.

Charge-offs are debts that a company deems “uncollectible.” According to Moody’s Investor Services, credit card charge-offs increased by 48 percent in August alone. And Moody’s expects them to continue increasing into late next year.

6.82 percent of all credit card debt has now been written off. With unemployment rising and the economy falling into even more dire straits, the credit card charge-off rate is sure to skyrocket. Which means that banks that have relied heavily on income from credit cards – like Capital One (COF) and American Express (AXP) – are sure to see bigger losses.

[Ed. Note: Keep away from companies that depend on credit cards. But keep an eye on companies that have issued a "red flag" alert. This could be your key to future profits. Find out what a "red flag" is and how it can make you money right here.]

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