One Issuer Will Take “Fewer is Better” Approach
| November 7, 2009 |
When it comes to credit cards and cutting back, the first thing that comes to many people’s mind would probably be the consumer. In many cases you would be right, but on this occasion it is the issuer, and unfortunalty it is not on interest rates or fees. In this case Bank of America, which is one of the largest Visa and MasterCard issuers within the United States, wants to be more selective when it comes to offering consumers their credit cards.
So why would Bank of America want to be more selective? According to the bank, they don’t see any other choice as they believe the card industry will not see the profits that they saw in the past. The reason why experts think they will be more selective is quite similar but were drawn completely off of numbers. Those numbers begin with a $1 billion loss in the third quarter, and a bank leading default rate of over 14 percent for the month of September.
So will we see the "fewer is better" approaching happening with other banks in the future? No one can be for sure. As the largest bank in the U.S., Bank of America was very deep with sub-prime lending which many believe was the tipping point of the economic downturn.
