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17/09/2009 -
As more consumers focus on reducing their debts - dubbed "deleveraging" - thanks to the recession, many are speculating that the trend may have serious implications for the credit card industry.However, in a presentation to analysts and investors, Capital One Financial CEO and president Richard Fairbank assuaged these fears by noting that deleveraging may actually be good for the credit card industry.
"In this era, deleveraging of the consumer will be a very powerful force," Fairbank told the audience, MarketWatch reported. "It's very healthy to have a deleveraged consumer. We as lenders will be paid through better credit performance."
Fairbank explained that consumers who pay off their debts are actually more attractive to credit card companies, as they tend to be more financially stable.
So although the credit card industry may not necessarily experience much growth as the global economy struggles to recover, there are some "encouraging signs of stabilization," MarketWatch reported.
Visa's recent credit and debit card volume report echoes this statement, finding that total card payments decreased by 1 percent in August. However, this is an improvement over July's decrease of 2 percent.
