Card Firms Scramble to Recoup Lost Profit

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Wall Street Journal 
August 27, 2010
Sidel, Robin
P. C1

Credit card companies have lost $1 billion over the past year due to the financial crisis; and facing new regulations and consumers less willing to rack up debt, they are looking for opportunities to boost revenue. Despite a slowdown in defaults and delinquencies, profitability likely will not improve due to high unemployment rates and lower rates of consumer spending. The Nilson Report shows a 10 percent decrease in outstanding credit-card loans to $772.19 billion in 2009, as consumers tightened their wallets and lenders tightened their standards. Thousand Oaks, Calif.-based credit-card consultant Robert Hammer expects the industry to lose $11 billion during the next five years as a result of new federal card rules; and while card companies boost interest rates and implement new fees, he says only 25 percent of lost revenue will be recovered through these strategies.
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