Credit card issuers in the United States booked 66.6 million new accounts in 2017. Yet the total number of accounts grew by only 2.3 million. Attrition explains the gap, according to a research report from Mercator Advisory Group. The report is titled Credit Card Acquisitions: Maximizing Results amid Change.
The report puts cardholder attrition at about 15 percent. As a result, issuers have to book that many new accounts just to keep their interest-generating portfolios steady.
Brian Riley, director of Credit Advisory at Mercator, wrote the report. He said issuers in the American card industry should be urgently concerned. Since 2015, he noted, the market has added more than 60 million new accounts each year. Total account growth, however, moves at a snail’s pace. In practice, he said, cardholders are leaving their issuers almost as quickly as issuers book new accounts. He also asked whether consumers may have outfoxed the rewards incentive model.
Profitability is under pressure too. Credit card return on assets fell from 7.65 percent in 2006 to a projected 3.74 percent in 2017, the report notes.
The 14-page report contains six exhibits. It covers U.S. cardholder attrition rates, total new account volumes and new account bookings by year. It also breaks down the sources of U.S. card acquisitions. Finally, it projects acquisition volumes by channel through 2022, as more of the business shifts toward digital acquisition.
Companies mentioned in the report include Bank of America, BB&T, Capital One, Chase, Citi, Discover, FICO and First Data. The list also takes in FIS, Fiserv, Mastercard, PNC, SunTrust, TSYS and Visa.
