In the Cards: Preserving Profitability in a Post-CARD Act World

October 2010
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In the cards: Preserving Profitability in a post-CARD world

At a glance

When Credit Card Accountability, Responsibility, and Disclosure emerged from the ashes of the financial crisis, leading firms flexed to cope. Click for star strategies.

The financial crisis of 2007-2009 and the Credit Card Accountability, Responsibility, and Disclosure Act (the CARD Act of 2009) have had a profound impact on the credit card industry. The Act has resulted in tighter credit for many consumers and caused credit card issuers and their technology partners to incur significant expenditures to comply with its mandates.

In the short term, credit card issuers focused their efforts on shedding risky accounts and altering billing practices, which have impacted revenues. Less attention was paid to the drivers of the cost structure supporting their credit card business. In order to sustain and grow profitability over the long term, credit card issuers will need to address their cost structures and make fundamental changes to their operating models.

Leading practices among companies using new costing methods to drive operating and strategic decisions have resulted in benefits such as:

  • More accurate assignment and tighter control of costs
  • Sharper identification of profitable customers
  • More accurate identification of value-generating products and services