Question by Ryan: So is there such a factor as…?
credit default swaps for credit card debt, and, if so, how do I get in??? =)
Nah, I wasn’t seriously thinking about purchasing CDSs on credit card debt. I just have a feeling that credit card creditors will be the subsequent ones forced to take a “haircut”, which would not technically result in a “default” scenario anyway, correct? =).

Ideal answer:

Answer by JoeyV
Confident, credit card debt is securitized like something else (every thing has been securitized….). You would just go to some counterparty like AIG and say that you wanted a CDS on [blah] credit card securitization and they would sell it to you.

Nonetheless, no one would do that trade with you simply because you don’t have adequate credit and are not an institution. You might have noticed that individuals are not purchasing CDS for their personal portfolios, and a designer CDS on some tranche of a credit card securitization would require that you be a substantial institutional investor (and the size would be large).

What makes you think that you have far more insight into credit card defaults than the men and women who make up the securitizations anyway?

Know far better? Leave your own answer in the comments!