Banks

Try Jim Cramer's Action Alerts PLUS
CLICK HERE NOW

Banks Face Mountain of Plastic

05/14/08 - 03:30 PM EDT

Laurie Kulikowski

Capital One, based in McLean, Va., expects U.S. card charge-offs in the range of 6% through the end of September and higher in the fourth quarter, it said last month during earnings. The company said that it is pulling back on loan growth as industry trends and economic indicators weaken.

While an extended recession will put a damper on just about any consumer-related company, electronic payment processors such as Visa(V - Cramer's Take - Stockpickr) and MasterCard(MA - Cramer's Take - Stockpickr) are in good positions. That's because the companies take in fees per card transaction and don't hold loans on their books like the banks or other card companies like American Express(AXP - Cramer's Take - Stockpickr) and Discover Financial(DFS - Cramer's Take - Stockpickr). The firms are also expanding their businesses outside of the U.S., which for the most part are still cash and check societies.

Consumers having trouble accessing cash through home equity lines as the credit crisis continues will be more apt to finance the purchases through their credit cards, analysts say.

Visa has acknowledged that its U.S. credit card business has slowed somewhat, but that the company's international and debit card businesses largely offsets the decline. The company has "a pretty high degree of resiliency," CEO Joseph Saunders said on Wednesday at the UBS conference. "When the economy weakens, as it has, we won't fall off a cliff - not even a little ledge."

1 2 3 4
» Next

Headlines & Perspectives

Banks

Go To Section Home


05/13/08
Westpac to Acquire St. George Bank

The all-stock deal will create Australia's largest bank.


05/12/08
Wachovia: Auction Rate Securities Probed

The Charlotte, N.C.-based bank says it has received 'inquiries and subpoenas' from state and federal regulators.


05/12/08
Sovereign to Raise $1.5 Billion

The bank is selling common stock and issuing debt.


08/05/08
Three Internet Stocks That Could Double

These forgotten Internet stocks are being accumulated by hedge funds.


08/15/08
The Five Dumbest Things on Wall Street

Raspberries for Apple; You'll be sorry, UBS; Fortress or Fort Knox? Wholly unappetizing Foods; give Liberty AOL or give them...


08/15/08
McCain Fund-Raising Picks Up

The GOP presidential candidate raised $27 million in July.


08/15/08
Cash-Back Cards Aren't Money in the Bank

Some credit and debit cards give you some cash back on purchases. But you need to manage it well to benefit from it.


Your Recent Quotes: Quote Up0 | Quote Down0
Dow S&P 500 NASDAQ
Oil*
Gold
10 Yr
0.00%
%
%
%
Data delayed 20 min
Sign up for our FREE newsletters now. See All

  • Cramer's Daily Booyah!
  • Before the Bell

Premium Stock Ideas