Brian A. Davis

Big Ben's Credit Card Moves: The Good, the Bad and the Ugly

Dear Readers,

Continued growth of MA and V will be predicated on consumer demand.

MA and V, have excellent business models. Both companies have healthy stock prices as well. MA and V are based on consumer credit transactions (which should see weakness in coming months).

1. Over-spending
2. Inability to service debt
3. Default rates
4. Tighter underwriting standards

The ability for consumers to service debt will be tested. While this becomes more or less an issue for the underwriting banks, it will also effect the bottom line of MA and V. Furthermore, once a MA or V user defaults, then that customer is unable to continue transactions. Last, banks will continue to scrutinize customers with tighter underwriting standards. There will be come customers that banks will not want. These issues will effect the bottom line of MA and V.

Respectfully,
Brian A. Davis

P.S. I do not hold positions on MA and V at the time of this article.