What is the Future of Credit Card Issuers?

With all the changes that have occurred within the last year, consumers are fed up with their issuers and many have vowed to never use a credit card again. In turn, many consumers are now using debit cards to pay for their products and services, as well as have switched to saving more money as opposed to spending it. For this reason, many experts have concluded that card issuers will see hard times for what could be years to come.

At the moment there are a couple of things that should have issuers worrying. The first, which has an immediate effect is the current level of unemployment. As far as analysts are concerned, unemployment has one of the most direct influences on the profit or losses for issuers. History has shown that late payments have risen dramatically in times with high unemployment rates and this time is no exception. The second factor effecting issuers is the implementation date of the Credit Card Accountability, Responsibility and Disclosure Act, which was signed in May. The date which is in early February is quickly approaching and issuers, for the time being, are still scrambling to find ways to make up revenue that will be lost. This is mainly due to the fact that the CARD Act requires promotional rates to remain in effect for at least six months, limits the ability for issuers to raise interest rates on existing balances and restricts fees for sub-prime cards among other things.

With so many things going against credit card issuers at the moment, what do you think the future is for issuers? For many including myself, it doesn’t seem that issuers will return to where they were for some time to come. With cardholders now receiving annual fees (where they didn’t before), interest rates at and above 30 percent, increased fees and lower credit limits, it doesn’t seem that the credit card issuers are trying to help themselves. Card companies instead are isolating themselves from the very consumers that relatively kept them in business throughout the years.