Bank One’s First USA credit card unit revealed yesterday that it will not grow as fast and will not produce as much profit as anticipated this year. The news sent shock waves through the industry and the stock market this week. First USA says the credit card business is not what it used to be. The revelations of credit card troubles among the nation’s second largest issuer represents a watershed event in the credit card industry. The issuer has effectively surrendered to consumers and has signaled other issuers it is no longer participating in cut-throat competition. Other major bank issuers such as Citibank, Chase, Bank of America and Fleet are facing the same issues as First USA. Non-bank players MBNA, Capital One, Providian and Household have already made the adjustments necessary to sustain growth in a very saturated and very mature industry. MBNA remains the affinity card king, while Capital One and Providian have focused on the sub-prime and super-prime segments. Household made sweeping changes earlier this year by revising the pricing of its largest portfolio segment, the ‘GM MasterCard’, and by entering the sub-prime market. Meanwhile other major bank players remain mired in a rate war for the mass market. Battling with teaser rates and single digit, fixed, go-to rates in the main stream credit card market in the U.S. has driven the commoditization of consumer bank credit card products. The Internet will only accelerate this reality. In an effort to maintain yields, First USA has added balance transfer fees, foreign transaction surcharges, and hair trigger late fees over the past year. This week First USA admitted its aggressive policies have aggravated attrition. While consumers have won the battle they have lost the war. As other major bank issuers retrench and given the concentration of market power, the elimination of the interest-free grace period is not far off.