Credit card companies full of the joys of spring
If you happened to wander out onto the terrace of Miami Beach’s swanky Fontainebleu resort last week you may have noticed the unusually contented countenances of many of those sipping cocktails as the sun went down. And there’s a good chance that those who looked most relaxed were delegates at the annual conference for credit card company executives hosted by SourceMedia.
This year’s was the best-attended SourceMedia event–and the mood of the crowd the most positive–since the credit crunch. So what are the credit card trends that were making these generally hard-nosed executives so smiley?
Credit card regulation didn’t bite
Remember when the Credit CARD Act of 2009 was still a bill, negotiating its way through the House and Senate? Credit card companies were genuinely terrified about its possible impact on their businesses, and threw money at lobbyists in an attempt to moderate its impact. They did manage to extract a few of its sharpest teeth, but many were still convinced that the new law would fundamentally undermine the credit card business model.
According to a report yesterday from Reuters, credit card regulation has been the number one talking point at industry conferences for three years. But no more. Last week, delegates were upbeat about how their businesses had survived the act intact, and positive about their chances in the future. One told a Reuters reporter that credit card companies were no longer as worried about future regulation. He went on: “Now it’s: ‘How do we get around it?'”
Credit card debt less of a burden
People tend to think about how credit card debt affects individual households. But it can be pretty miserable for card issuers too, and in recent years they have had to write off countless billions in uncollectible balances.
That trend is now turning around, and card companies are beginning to see light at the end of what has been a very long and dark tunnel of losses.
Credit card trends aren’t all positive
Of course, it would be no fun being in business if there were no challenges to overcome, and delegates to the Miami Beach conference knew they still faced plenty. Both credit card use and the balances people carry forward are significantly down, reducing two of card issuers’ most valuable revenue streams.
The companies seem confident they can lure people back, but wooing is an expensive business. Just a couple of weeks ago, American Express unveiled its first quarter profits, and they were a third up from the like period a year ago. But it also revealed that its costs had rocketed as it made its credit card rewards program even more attractive.
Credit card rewards are just one of the marketing tools card issuers are using to attract new customers and boost credit card use. Companies are also investing heavily in direct mail solicitations, while earlier this week Discover cards announced a new social media initiative.
Making credit cards pay is what card issuer executives are employed to do. Unlike in recent years, when they were buffeted by external forces such as federal regulations and a poor economy, they now feel in control. And, no doubt, as they left Miami Beach they were laughing all the way back to their banks.
Disclaimer:The information in this article is believed to be accurate as of the date it was written. Please keep in mind that credit card offers change frequently. Therefore, we cannot guarantee the accuracy of the information in this article. Reasonable efforts are made to maintain accurate information. See the online credit card application for full terms and conditions on offers and rewards. Please verify all terms and conditions of any credit card prior to applying.
This content is not provided by any company mentioned in this article. Any opinions, analyses, reviews or recommendations expressed here are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any such company. CardRatings.com does not review every company or every offer available on the market.
Published (Modified )