Followers

15/01/2011

Credit Card Allocations

I thought i'd demonstrate one of my favourite charts here.
This Pie Chart shows the share of the credit card market. The percentages on the credit card companies aren't of the total market, but of the top 15 firms in the market. You can see that the credit company Chase hold 22% of the market while BofA are the next biggest with 21%. Other firms such as Citi and Amex hold 25% of the credit card market together while the others all hold under 10% each.
It’s pretty clear from this chart that between them, the big credit card issuers absolutely have the ability to set prices. It’s also clear just by looking at their marketing materials that none of them is particularly interested in competing with the others by reducing the maximum interest rate that they charge.
In most contexts, a chart like the one above would I think bespeak a competitive market. But in credit cards, I’m not so sure. On the other hand, do we want credit cards to be highly competitive? I’m not sure that we do: what we really want is for credit cards to be transparent.
At the margin, if the card issuers bring down their interest rates, that will only result in even more people borrowing even more money on their credit cards. But doing so is nearly always the worst possible way of borrowing money, except for maybe going to the loan shark down the street. Ideally we want the whole credit-card market to shrink, and for banks to go back to offering personal loans.

Thank you for reading and please feel free to express your own views.

20 comments:

  1. awh my credit card company isnt even on ther.

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  2. wow capitol one has an 8% market share? unreal

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  3. hello lovely,

    thanks for your comment :)!

    Have a great weekend :)))

    greetings
    http://mar-iza.blogspot.com/

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  4. Ideally we want the whole credit-card market to shrink, and for banks to go back to offering personal loans.

    dont count on it happening any time soon!

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  5. Those credit cards can get you into trouble.

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  6. It's good that CC's arent that popular here.

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  7. cool graph, and very interesting analysis. im looking forward to your future posts.

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  8. interesting post, keep on the good work :)

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  9. very informative, good post.

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  10. As always nice graph and write up dude

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  11. Nice graph, I can see why it's your favorite..

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  12. boa recently got better, but they still suck nuts

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  13. thats really cool check out my blog if you love credit cards

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  14. interesting post dude keep it up

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  15. Credit Card Allocations Pie Chart shows the share of the credit card market. In most contexts, a chart like the one above would I think bespeak a competitive market.

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