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Private-Label Credit Card Spending Drops

Mercator Advisory Group by Mercator Advisory Group
December 6, 2011
in Analysts Coverage
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A recent report estimates that 2010 was an exceptionally bad year for private label credit cards, with purchase volume down 14.4% to $183 b.

Leading the trend in declining purchase volume were several of the larger issuers — including Citibank, which is the largest — with retail programs such as Home Depot, Sears, and several retail gas companies. Citibank reported a purchase volume decline of 20%, although the decline can be partly attributed to the sale of certain programs to GE Capital Retail Finance.

Packaged Facts estimates that total private-label credit card receivables plummeted 18% in 2010 — mostly due to charge-offs by issuers, although most issuers noted that consumers had increased payment rates. Lower purchase volume added less to the balance sheets of issuers.

Mercator estimates that the 2010 decline was not so sharp in spending, but has been ongoing over several years. And the decline in accounts on file has also been significant as issuers closed inactive and nonperforming accounts during the recession. Mercator’s CustomorMonitor Survey Series data noted a major decline in consumer-reported holding of private label cards in 2010 over 2009.

Click here to read more: http://www.mediapost.com/publications/article/163213/private-label-credit-card-spending-drops.html

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