September 06, 2010
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What's Hot; What's Not, Pt.4
Don't give up hope just yet.Let's not give up hope just yet on the credit card industry; there remains a couple of other big players in the market. American Express is more than a credit card company, it is a diversified global financial services company. The company offers a variety of products including credit cards, charge cards, and traveler's cheques. In regard to the market, American Express holds over 24 percent of the total dollar value of card transactions in the U.S. market. This figure represents the highest dollar volume in the industry. Although the numbers are commendable, it goes without saying that American Expresses is at great risk as consumers continue to reduce spending.
American Express is closely tied to the global market as well; it is the largest credit card issuer worldwide. As travelers worldwide also face great challenges in each country's economy, it is expected that travel will also continue to decline adding to the company's U.S. risks. Although American Express has been the top performer in the industry, the company's stock has fluctuated between $31.69 to a high of $49.19 over the past year. Currently, its stock is also wavering between $40 and $41. Analysts believe it is not the time to invest in this high risk credit card stock.
There are several other card companies that are not expected to see much relieve from an increase in debit card spending. These companies include Capital One Financial, JPMorgan & Chase, Bank of American and Citigroup. These companies offer a variety of products including personal banking and investment services. They are the nation's top four credit card companies and have all taken drastic blows as a result of the recession. Although they continue to report a decline in delinquencies and card defaults, debit card spending will not be sufficient to return them to profitable services. Most of them have already turned their focus to developing other businesses and have significantly reduced the number of open card accounts. The only thing that is hot here, is the advice to steer clear of this risky market.