Credit Card Companies Storming Back as Economy Rebounds
Economic Trends Positive
Sunday’s New York Times painted a positive portrait of a U.S. economy that’s quickly regaining health, strength, and confidence. Of course, the piece acknowledged that there’s a way to go before things are fully back to normal but the overall tone was one of restored vigor.
Some of the statistics quoted in the Times‘s article include:
- March saw orders for long-lasting manufactured items increase sharply
- Sales of new homes leaped 27 percent that month
- Consumer spending–according to some economists’ estimates–expanded by four percent in the first quarter of this year
- Exports in January and February were up 15 percent on the same time in 2009
Credit Card Trends Also Positive
Much of the data surrounding credit card use are similarly positive. For example, the Federal Reserve’s figures, published April 7, for February credit card debt showed that it dropped at an annual rate of 13.1 percent. And Americans owed $100 billion less in credit card debt that month than they did back in the last quarter of 2008.
Meanwhile, Visa Inc. published its fiscal second quarter results Wednesday, and these exceeded most analysts’ expectations and prompted the company to increase its 2010 forecasts. Joseph Saunders, company chairman and chief executive, said that Visa: “…is increasingly optimistic that the worst of the recession is behind us… Our performance was fueled by higher-than-expected payments-volume growth.”
In other words, credit card use is up. In fact, during the quarter ending March 31, 2010, the value of transactions on Visa-branded cards jumped 13 percent on the same period in 2009–to $745 billion. The number of transactions also rose over the same period: by 14 percent to $10.6 billion.
Credit Card Companies Also Doing Better
Many card issuers (Visa is a debit and credit card network; not the same thing) are also doing much better this year. But, arguably, American Express is the star in the credit card company firmament.
Last week, the company published its first quarter results, and they were even more impressive than Visa’s. By many measures of credit card trends, American Express is the leader, or at the very least, one of them.
American Express a Leader
For instance, AmEx card customers spent 23 percent more in the first quarter of this year than during the same period in 2009, significantly beating Visa’s rise in credit card use. And the company had to write off (“charge off” in the jargon) less problem credit card debt than last year and than most of its competitors.
There is a wide range of reasons for the company’s strength:
- AmEx is a payment network as well as a credit card company
- It offers charge cards as well as credit cards
- It has maintained conservative lending policies
- It has a big presence in the corporate market
Of course, American Express executives would argue that–more importantly than any of those–the company offers superior products. And, depending on your needs, they make a good point. A couple AmEx cards that are particularly worth checking out are (Terms and restrictions apply to these offers):
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