The CARD Act One Year Later Impact on Pricing and Fees Jennifer - - PowerPoint PPT Presentation

Comptroller of the Currency Administrator of National Banks

The CARD Act – One Year Later

Impact on Pricing and Fees

Jennifer Faulkner Retail Credit Risk Specialist OCC Large Bank Division February 22, 2011

Comptroller of the Currency Administrator of National Banks

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The OCC collects National Bank loan level credit card data…Serves as a tool for our analysis of Card Act Impact

Source: OCC Credit Card Metrics General Purpose and Private Label Credit Card Only – approximately 65% of industry

50 100 150 200 250 300 350 400 $0 $100 $200 $300 $400 $500 $600

July-09 Oct-09 Jan-10 Apr-10 July-10 Oct-10

Accounts Outstanding Balances

Outstanding Balances and Accounts

YOY Balances and Accounts declined 14% and 7%, respectively

Outstanding Balance (Left) Account (right)

Billions Millions

Comptroller of the Currency Administrator of National Banks

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More accounts are subject to higher APR than in the past, increasing shortly before the Card Act

Source: OCC Credit Card Metrics Including General Purpose and Private Label Credit Card Only

0% 5% 10% 15% 20% 25% 30% 35%

0% <= 3.99% 4.00 - 7.99% 8.00 - 11.99% 12.00 - 15.99% 16.00 - 19.99% 20.00 - 23.99% 24.00 - 27.99% 28.00 - 31.99% > 32% Missing/Unknown

Retail APR

Account Distribution by Retail APR

Nov-09 Nov-10

% of Accounts

Comptroller of the Currency Administrator of National Banks

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But since the Act went into effect, upward repricing down significantly

Source: OCC Credit Card Metrics General Purpose and Private Label Credit Card Only

5 10 15 20 25 30 July-09 Jan-10 Feb-10 Nov-10 # of Accounts

Accounts with an APR Increase

Change in Terms Workout Exit Intro rate expiry Penalty

Millions

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3.5% 0.3%

0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% Nov-08 Feb-09 May-09 Aug-09 Nov-09 Feb-10 May-10 Aug-10 Nov-10

% of Accounts with APR increase

% of Accts with APR Increase (due to Penalty and Change in Terms)

5

Source: OCC Credit Card Metrics General Purpose and Private Label Credit Card Only

%

% of Accounts

With a small percentage of accounts with an APR change in terms or penalty reprice

Comptroller of the Currency Administrator of National Banks

4% 21% 2% 3%

0% 5% 10% 15% 20% 25% 30% Jan-09 Apr-09 July-09 Oct-09 Jan-10 Apr-10 July-10 Oct-10

% of New Accounts With Annual Fee

FICO<660 FICO 660+ 6

Annual fee is coming back, especially for higher risk accounts

Source: OCC Credit Card Metrics General Purpose and Private Label Credit Card Only % of Accounts

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4.5% 3.2% $278 $8

($50) $0 $50 $100 $150 $200 $250 $300 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% July-09 Oct-09 Jan-10 Apr-10 July-10 Oct-10

Overlimit Fee Revenue

% of Accounts Over limit and Over limit Fee Revenue

% of Overlimit Accounts Overlimit Fee Revenue 7

Over limit fees essentially disappeared

Source: OCC Credit Card Metrics General Purpose and Private Label Credit Card Only

$ Millions

% of Accounts

Comptroller of the Currency Administrator of National Banks

6.52% 5.73%

$0 $5 $10 $15 $20 $25 $30 $35 $40 3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5% 7.0% 7.5% 8.0%

July-09 Oct-09 Jan-10 Apr-10 July-10 Oct-10 Average Late Fee

% of Accounts with Late Fees and Average Late Fee

% of Accts with Late Fee Average Late Fee $35 Ave Fee $23 Ave Fee 8

Also a material reduction in both occurrence of accounts being late and size of late fee charged

Source: OCC Credit Card Metrics General Purpose and Private Label Credit Card Only % of Accounts

Comptroller of the Currency Administrator of National Banks

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We are closely monitoring fee distributions for a shift or introduction of new fees. Nothing clearly evident yet…

Source: OCC Credit Card Metrics General Purpose and Private Label Credit Card Only

$0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000 July-09 Mar-10 Nov-10

Fee Revenue

Fee Distribution

Net Debt Suspension Fee Net Other Fee Net Cash Advance Fee Net BT Fee Net Annual Fee Net OCL Fee Net NSF Fee Net Late Fee

$ Millions

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Questions?