Report: Credit Card Issuer Profitability In a Difficult Economy: Issuers Must Focus on Interest Income While Balancing Against Increased Default Risk TOC

Overview
Primary Questions
Findings and Analysis
Methodology
Executive Summary
- The Economy Affects Financial Institutions' Credit Card Issuance Policies
- Decreased Consumer Spending and Potential Shift to Interest Income for Card Issuers is Not Without Risks - Political and Otherwise
Consumers Attempt to Reduce Credit Card Usage, But are Less Able to Pay Off Balances
- Interchange Revenue May Suffer in the Immediate Term as Consumers Curtail Spending
- Potential for Increased Consumer Reliance on Credit Cards as Recession Wears On
- Consumers Show Increased Difficulty in Paying Off Credit Card Debt
- Card Issuers Face Increased Regulation and Scrutiny with Regards to Interest Rate Policies
Over Half of Credit Card Issuers Surveyed Suffered Exposure and Losses
Does the Economy Pose a Threat or Present an Opportunity?
Issuers Cut Back Lines of Credit as a Response to Losses and Exposure
More than Half of Middle-Aged Consumers Less Able to Save
Economic Difficulties Lead Middle-Aged Consumers to Cut Back Credit Card Usage
Economic Situation Results in More Credit Card Debt for Middle-Aged Consumers
Build or Buy: Vendor Solutions from the Credit Bureaus Intend to Find the Balance and Allay Risk for Issuers
Level of Trust in Financial Institutions Drops Among Middle-Aged Consumers
Issuers Constrict Acquisition of New Cardholders: Opportunity for Aggressive Issuers
Mirror Image: One-Third of Issuers Expand Acquisition
Monitor Middle Income Consumers Closely to Maintain the Risk-Opportunity Balance
Credit Card Charge Off Rates Increase Over the Past Several Quarters
Consumer Credit Outstanding Also Shows Increases 2007 to Early 2008
Gas Purchases and Other Staple Purchases are of Particular Interest in Shifting Behavior
Appendices: Additional Consumer and Executive Information

Table of Figures:

Figure 1: Economic Impact of Various Consumer Behaviors
Figure 2: Financial Institutions Suffering Losses due to Economic Conditions
Figure 3: Financial Institution Reaction to Economy with Existing Cardholders
Figure 4: Consumer Ability to Save as a Result of the Economy by Age
Figure 5: Credit Card Usage Changes as a Result of the Economy by Age
Figure 6: Ability to Pay off Credit Card as a Result of Economic Changes by Age
Figure 7: Consumer Trust in Financial Institutions by Age
Figure 8: Issuer Constriction of Cardholder Acquisition
Figure 9: Issuer Expansion of Cardholder Acquisition
Figure 10: Consumer Ability to Pay off Credit Card by Income
Figure 11: Credit Card Chargeoffs by Quarter
Figure 12: Credit Card Outstanding by Time Period
Figure 13: Specific Behavior Spending Changes among Consumers
Figure 14: Credit Card Usage by Income
Figure 15: Purchase of Luxury Good by Age
Figure 16: Purchases of Luxury Goods by Income
Figure 17: Credit Card Balance Changes by Age

Credit Card Issuer Profitability In a Difficult Economy: Issuers Must Focus on Interest Income While Balancing Against Increased Default Risk

Table of Contents

Table of Figures: