Tag Archives: consumerism

Retail Cards Stagnate and Face Higher Losses

A new study has found that the U.S. private-label credit card market
contracted by four percent last year and is likely to grow outstandings
a mere 50 basis points in 2009. At the same time, issuers of store and
gas credit cards are facing rapidly deteriorating cardholder performance
as charge-offs have soared by more than 40% and delinquency by nearly
24%. An annual report issued by market researcher Packaged Facts
estimates that receivables for the private-label credit card market
declined to $109 billion in 2008, compared to $114 billion for 2007. In
2007, only 11 private-label credit card issuers had receivables greater
than $100 million, down from 17 in 2004 and 27 in 2001. Further, only
three banks had receivables of more than $10 billion in 2007. Packaged
Facts says this massive concentration at the top of the list is the
result of years of ongoing acquisitions and consolidation in the
industry, leaving the top three private-label credit card issuers in
control of roughly three-quarters of total private-label receivables.
Meanwhile, the latest ABS “Credit Card Index” results from Fitch Ratings
shows 60+ day delinquencies hit 4.5% and charge-offs hit 9.1% at
mid-year 2008 for retail or private label credit cards. Fitch expects
charge-offs to exceed 12% in first half 2009. Contributing to the
performance erosion is that private-label portfolios have a greater
proportion of lower quality borrowers and higher base interest rates.
(CF Library 12/12/08)

RETAIL CARDS OUTSTANDINGS
2005: $104 billion
2006: $111 billion
2007: $114 billion
2008: $109 billion
2009: $110 billion
Source: Packaged Facts & CardData.com