Second-quarter earnings reports recently released by American Express, Capital One and Discover offered some interesting tidbits for the everyday consumer, rather than just stockholders.
All three reported that spending among U.S. cardholders was up from a year ago. Purchases by Capital One cardholders jumped 13 percent in the second quarter from the year before, while the average American Express cardholder spent 5 percent more this quarter, $3,954 versus $3,776 in 2012. Discover card sales grew by 4 percent.
At the same time, the percentage of credit cards 30 days or more past due declined year-over-year at all three companies, with Discover's rate reaching an all-time low. And the trio reported that the percentage of card accounts written off as uncollectible decreased in the second quarter from the previous year.
So it appears credit cardholders are feeling more comfortable with charging more but are still able to make their card payments on time -- a good sign for the economy.
The other curious notes came from the companies' earnings calls with investors and analysts.
Capital One's Richard Fairbank -- founder, executive chairman, chief executive officer and president -- said the company has shied away from teaser rates to bring in customers, a more common tactic used by competitors. It also avoids consumers who carry high balances from month to month. So, cardholders looking for a zero percent balance transfer rate to help pay down a high balance should skip Capital One.
Fairbank also said that credit card companies are not scaling back rewards programs to save money. Capital One specifically is focusing on simple, easy rewards programs that don't come with a lot of restrictions.
In June, the company introduced its Quicksilver and QuicksilverOne cards that offer one flat rate on all purchases: 1.5 percent. There are no caps on how much a cardholder can earn, no expirations and no minimum amount to redeem.
"One of the key characteristics of what we offer is what you see is more what you get," Fairbank said in the conference call. "There's not lots (sic) of fine print and complexity in terms of, ultimately, how much the customer gets."
In its earnings call, American Express noted that its second-quarter revenue was hurt by cardholder reimbursements, which "is driven by (the company's) continuing commitment to proactively review card practices, identify any issue and remediate them quickly," according to Daniel Henry, executive vice president and chief financial officer.
Last year, the Consumer Financial Protection Bureau ordered American Express to refund $85 million to 250,000 customers and pay $27.5 million in penalties for a slew of violations. They included:
- Withholding a $300 sign-on bonus for some eligible cardholders.
- Charging illegal late fees.
- Discriminating against applicants because of age.
- Failing to report consumer disputes to credit bureaus.
- Lying to consumers about the benefits of paying off old debt.
"We continue to place a premium on self-identifying and resolving any customer related issue," Henry said in the conference call, "and we clearly believe that this is the right thing to do for our customers."
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