Just adding the math for those who might have missed my point.
If 3/4 of people avoid default the rest don't so .75 * 1.28 = .9675 which is less than 1, but the 25% that fail don't all fail on the first day so they are probably going to average ~6 months of payments so .25 * .5 * .29 + .9675 = 1.00375 which is larger than 1. Add in some fee's and whatever principle people payed back before defaulting and you are making money.
Next year some people that made it this year will fail but your adding some people to make up for those that defaulted last year. In the end you need people to average 4 years before defaulting which I suspect is normal.
And until the card issuer officially writes down the debt, the principal that the borrower owes to the issuer is counted as an asset on the issuer's balance sheet.
Yep, but they don't write down all of that debt they first charge insane late fee's and interest for a few months and then sell that highly inflated debt to a collection agency or package up that debt before it defaults and sell that to wall street.
