Consumer Payment Card News

Record Profits

Thanks to a significant drop in funding costs and a rise in fee income, it looks like 2001 will be a banner year for the credit card industry. As a matter of fact, the return-on-assets, or pre-tax profits of the industry may reach 4.0%, the highest level since 1989. Without the eleven federal rate cuts last year, the picture would be much different. Charge-offs or losses are now at a ten year high, and personal bankruptcies hit an all-time high during 2001. Operating expenses, or the cost of running a credit card program, also inched upward to the highest level since 1992. California-based R.K. Hammer Investment Bankers predicts 2002 will be rough year for the industry as delinquency, charge-offs, and bankruptcies are headed higher in the wake of rising unemployment.

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