When JP Morgan Chase bought the assets of the failed bank Washington Mutual for $1.9 billion last week, it became the second biggest bank in the country behind Bank of America. It also became the largest credit card issuer in the United States, at least in terms of outstanding loan balances.

Washington Mutual purchased the credit card company Providian in 2005, and began marketing cards under the WaMu brand as well as being the issuer for credit card partners such as retailers, associations, sports teams, and more. With the WaMu acquisition, Chase not only increases its customer base, but it buys these contractual relationships with outside partners, a valuable asset in the competitive credit card market.

While the credit card market remains competitive, Chase’s acquisition of WaMu — coupled with today’s news that Citi will buy Wachovia — means the market has consolidated further, with even fewer players dominating the lion’s share of the market. This is probably not currently a concern to regulators who are preoccupied with stabilizing financial markets, but over time it could mean less choice for consumers as it becomes more difficult to gain credit and also avoid the higher interest and fees that most of the major issuers offer.

Published 09/29/08 (Modified 04/20/12)