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 The OCC collects National Bank loan level credit card data…Serves as a tool for our analysis of Card Act Impact Outstanding Balances and Accounts Billions Millions YOY Balances and Accounts declined 14% and 7%, respectively $600 400 350 $500 Outstanding Balances 300 Accounts $400 250 $300 200 150 $200 100 $100 50 $0 0 July-09 Oct-09 Jan-10 Apr-10 July-10 Oct-10 Outstanding Balance (Left) Account (right) Source: OCC Credit Card Metrics 2 General Purpose and Private Label Credit Card Only – approximately 65% of industry
Comptroller of the Currency Administrator of National Banks More accounts are subject to higher APR than in the past, increasing shortly before the Card Act Account Distribution by Retail APR 35% 30% 25% Nov-09 % of Accounts 20% Nov-10 15% 10% 5% 0% 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 Source: OCC Credit Card Metrics 3 Including General Purpose and Private Label Credit Card Only
Comptroller of the Currency Administrator of National Banks But since the Act went into effect, upward repricing down significantly Accounts with an APR Increase Millions 30 25 Change in Terms # of Accounts 20 Workout Exit Intro rate expiry 15 Penalty 10 5 0 July-09 Jan-10 Feb-10 Nov-10 Source: OCC Credit Card Metrics 4 General Purpose and Private Label Credit Card Only
Comptroller of the Currency Administrator of National Banks With a small percentage of accounts with an APR change in terms or penalty reprice % of Accounts with APR increase % 8.0% 7.0% 6.0% % of Accounts 5.0% 4.0% 3.5% 3.0% 2.0% 1.0% 0.3% % of Accts with APR Increase (due to Penalty and Change in Terms) 0.0% Nov-08 Feb-09 May-09 Aug-09 Nov-09 Feb-10 May-10 Aug-10 Nov-10 Source: OCC Credit Card Metrics 5 General Purpose and Private Label Credit Card Only
Comptroller of the Currency Administrator of National Banks Annual fee is coming back, especially for higher risk accounts % of New Accounts With Annual Fee 30% 25% 21% 20% % of Accounts 15% 10% 4% 5% 3% 2% 0% Jan-09 Apr-09 July-09 Oct-09 Jan-10 Apr-10 July-10 Oct-10 FICO<660 FICO 660+ Source: OCC Credit Card Metrics 6 General Purpose and Private Label Credit Card Only
Comptroller of the Currency Administrator of National Banks Over limit fees essentially disappeared % of Accounts Over limit and Over limit Fee Revenue $ Millions 6.0% $300 $278 $250 5.0% 4.5% Overlimit Fee Revenue % of Accounts $200 4.0% 3.2% $150 3.0% $100 2.0% $50 $8 1.0% $0 0.0% ($50) July-09 Oct-09 Jan-10 Apr-10 July-10 Oct-10 % of Overlimit Accounts Overlimit Fee Revenue Source: OCC Credit Card Metrics 7 General Purpose and Private Label Credit Card Only
Comptroller of the Currency Administrator of National Banks Also a material reduction in both occurrence of accounts being late and size of late fee charged % of Accounts with Late Fees and Average Late Fee 8.0% $40 $35 Ave Fee 7.5% $35 7.0% Average Late Fee % of Accounts $30 6.52% 6.5% $23 Ave Fee $25 6.0% 5.5% $20 5.73% 5.0% $15 4.5% $10 4.0% $5 3.5% 3.0% $0 July-09 Oct-09 Jan-10 Apr-10 July-10 Oct-10 % of Accts with Late Fee Average Late Fee Source: OCC Credit Card Metrics 8 General Purpose and Private Label Credit Card Only
Comptroller of the Currency Administrator of National Banks We are closely monitoring fee distributions for a shift or introduction of new fees. Nothing clearly evident yet… $ Millions Fee Distribution Net Debt Suspension Fee $2,000 Net Other Fee $1,800 Net Cash Advance Fee Net BT Fee $1,600 Net Annual Fee Net OCL Fee $1,400 Net NSF Fee $1,200 Net Late Fee Fee Revenue $1,000 $800 $600 $400 $200 $0 July-09 Mar-10 Nov-10 Source: OCC Credit Card Metrics 9 General Purpose and Private Label Credit Card Only
Comptroller of the Currency Administrator of National Banks Questions? 10
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