Accounts? What Accounts?

by Ken Paterson 0

With the release of Visa and MasterCard Q3 earnings data, we cansee a bit of hope in that combined Visa/MasterCard credit cardpayment volume appears to be stabilizing, if not growing (up twoquarters in a row).With the thrill ride of the last two years, itis perhaps too early to declare an outright turnaround.We havecertainly seen no encouraging signs from the Fed’s G19 reading onrevolving consumer credit, which remains in the red.

Often neglected as we watch for signs of hope, is the number ofcredit card accounts on file.This indicator remains persistentlynegative, and Visa and MasterCard collectively lost over 27 percentof credit card accounts on file since Q1 2008.As the sum of allpurges-driven by both issuer and consumer decisions-this statisticis a drastic drop by any standard.It is amazing to see growth inpayment volume while the base of accounts continues to shrink; somecardholders, both business and consumer, must have decided that itis OK to spend again!

Perhaps we will know a real turnaround is at hand when accountson file start to grow again.Until then, the hard fact is thatcredit cards are a shrinking business.

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