Chase Expects Huge Loss Due To Credit CARD Act
| April 9, 2010 |
Have you ever wondered how much the regulations implemented with the Credit CARD Act would cost issuers? While in the past there were theories, it now looks like we know as one of the largest issuers in the country has decided to announce how much they are expecting to lose. That issuer is Chase and the amount is substantial, no matter how you look at it.
According to a recent article by the associated press the loss of potential revenue by Chase hits the tune of somewhere between $500 and $750 million. Just like many other credit card issuers the loss is due to the changes directed around interest rates as well as fees. The increases in rates as well as fees (over-limit fee for example) made up a substantial part of their revenue and now issuers must find other ways to not only offset these but hopefully make a profit.
When it comes to offsetting such a huge loss in potential revenue there are a couple of things that Chase says has to be done, one of which is reducing the amount of cards issued. According to the CEO, they will no longer offer cards to around 15 percent of its current customers. The reason behind this is mainly because some cardholders are now considered too risky. In addition to that, they have already reduced credit lines and canceled cards that have gone inactive for a substantial period of time.
| Share | Tweet |
Everyone is pointing fingers and trying to take everyone down with them when it comes to consumers, businesses and government losing money. Watching this recession is like watching bunch of people throw each other under the bus and the ones complaining the most are those with the most money, ironically enough.
It’s horrible how much this country has come to rely on credit. I was reading another blog and they called credit one big pyramid scheme. I’d have to agree with that. We built our economy of the backs of nothing and now that it’s collapsed, everyone is pointing fingers and no one has stopped to realize that we ALL took a loss.
The new credit card laws couldn’t come at a worse time. I was reading on creditinc.com that the new laws will make it worse not only for the companies, but the consumers. Supposedly, fees will raise. I guess if anything, consumers can take this as an abrupt weening off of something so insubstantial as credit. Perhaps, people will learn to save their money and use credit as a tool rather than a crutch.
Comment by Nancy Mashood — April 12, 2010 @ 6:21 pm