Consumer Payment Card News

Card Bumps

A new report suggests that inflation, rising interest rates, higher minimum payments and the debit card shift is hitting traditional credit card issuers between the eyes. The research says that credit card issuers need to look more closely at consumer behavior to survive in the new market. TowerGroup says credit card issuing banks have traditionally done a solid job of dealing with environmental and regulatory challenges but may not be ready to navigate the uncharted waters ahead. TowerGroup believes the increase in minimum card payment is likely to dampen credit card use and increase delinquencies. Also, the rise in interest rates will revert the positive movement in write-off that issuers have experienced in early 2006. Additionally, TowerGroup expects that the continued consumer shift to debit cards as well as rising prepaid card adoption will reduce the overall transaction volume of base credit card receivables and therefore reduce transaction-based economies of scale.

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