A Five Star Equities report examining the outlook for companies in the Credit Services Industry claims that Americans are charging less on their credit cards despite rises in consumer spending (view press release). According to figures released by the Federal Reserve, credit card charges decreased by USD5 billion in the US during January and February. In February, consumers held USD799 billion in credit card debt, 15% less than what was held during the first month of the ‘Great Recession.’ The issue is worrying for credit card companies who rely on processing fees and interest charges for revenue.
Regarding the credit card companies, both Visa and MasterCard saw a dip in the price of shares this week despite reporting strong Q1 results. Visa’s net income for the quarter was up 21% on last year to USD 1.1 billion yet the value of shares fell due to a statement from CEO Joseph Saunders saying the company was under a Justice Department probe following an antitrust violation. MasterCard reported net income up 21% on last year to USD682 million yet shares fell during early morning trading due to distress in Europe and a slowing job market.
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