SOURCE: Cards & Payments and SourceMedia

May 04, 2006 08:00 ET

Cards&Payments Releases 2006 Annual Bank Card Profitability Study

Card Issuers' Collective After-Tax Return on Assets Jumps 25%

NEW YORK, NY -- (MARKET WIRE) -- May 4, 2006 -- Despite rising federal fund rates and changes in U.S. bankruptcy law that led to a dramatic rise in bankruptcy filings, U.S. issuers of Visa and MasterCard credit cards in 2005 posted a collective after-tax return on assets of 1.99%, up from 1.59% in 2004, according to "Cards&Payments'" annual Bank Card Profitability Study and Annual Report. "Cards&Payments," published by SourceMedia, is a monthly magazine covering news and developing trends in the payments industry.

Featured as the cover story in the May issue of "Cards&Payments," the study's findings were compiled from annual reports, government agencies, card companies' financial results and interviews with financial analysts and industry consultants.

Total revenue among issuers of Visa and MasterCard consumer and commercial credit cards last year reached $109 billion, up 5% from $103.4 billion in 2004. However, penalty-fee revenue dropped 10%, to $7.9 billion from $8.8 billion, as fewer consumers were delinquent on their card payments than were in 2004. Expenses were kept in check, rising just 1% last year to $90.5 billion from $89.3 billion in 2004.

"With rising consumer debt and home-heating expenses going up, 2006 could be a challenging year for the credit card industry if consumers find it more difficult to pay their bills. But there are promising signs as well," stated Jeffrey Green, "Cards&Payments" editor. "The contactless card market continues to grow, and a variety of new merchant segments, including quick-service restaurants, are beginning to accept credit cards," added Green. "And perhaps as soon as next year, consumers will be able to use their cell phones to initiate payments with their cards, which could further drive industry growth."

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About "Cards&Payments" and SourceMedia, Inc.

"Cards&Payments" is the monthly publication that reports on the electronic transactions industry covering topics such as collections & recovery, marketing, loyalty, merchant acquiring, e-payments and emerging noncard-based systems technology to senior-level executives.

SourceMedia, an Investcorp company, provides market information, including news, analysis and insight, to the financial services and related industries such as accounting and technology, through its publications, industry-standard data applications, seminars and conferences.

Contact Information

  • News Release Contact:
    Jeffrey Green
    Editor
    Cards&Payments
    (312) 983-6129
    Email Contact

    Corporate Contact:
    Anne O'Brien
    SourceMedia
    (212) 803 8280
    Email Contact