New studies and credit issuer backlash against CARD Act regulations highlight just how plastic American consumers are.
According to CBSnews.com, nearly 700 million credit cards are issued in the United States. That’s more than two cards for every American. Now, before you walk away whistling the tune of the Beach Boys' 1963 hit Surf City, consider this corresponding statistic: Those 700 million cards are linked to $775 billion in outstanding credit card debt.
The effects of the Great Recession, such as 10% unemployment and drooping U.S. consumer confidence, have altered consumer spending habits. We are a nation of debt, but we are trying to dig ourselves out and new stipulations imposed by the latest wave of CARD Act regulations are spurring fears that banks and other credit issuers – yes, including credit unions – will deploy new credit card tactics to increase ever-climbing rates and exuberant fees for alternative services such as foreign-exchange transactions.
Unfortunately, some banks have already launched aggressive overdraft marketing campaigns to cajole cardholders into programs that will protect them in case of “emergencies.” Credit cards are certainly a challenging product to offer in today’s lending environment, but credit unions can use their understanding of their card performance to set themselves apart from other lenders.
Has your credit union adopted new methods or skills to help it better manage a long-term credit card program? If you’re looking for a solid framework to analyze its program, check out Callahan’s webinar series dedicated to post-CARD Act portfolio optimization.