Credit Card Business isn’t all Profits
Credit card companies may have been printing money for the past few years, but their access to the profit train may be limited in the near future. Despite Discover’s second quarter profit announcement, CNN Money has an indepth article on the increasing loan loss provisions, charge off rates, and potential deterioration of profits in the industry. It also points to the fact that prospective buyers are reportedly backing away from the auction of General Electrics $30 billion dollar credit card business.
Only time will tell if the credit crisis will force credit card companies to engage in writedowns similar to the billions in investment write offs in the investment banking industry do to the repricing of mortgage backed securities. You can read more about the deteriorating profits of the credit card industry at this article at Marketwatch.
