As Columbia Law School professor Robert Jackson noted in a Wall Street Journal op-ed on Thursday, there needs to be a source of real competition for the credit-card pushers, namely online marketplace lenders, so consumers with below-average credit scores can have access to credit at somewhat reasonable rates.

Because there is clearly demand. Credit card balances in the U.S. could hit $1 trillion this year. That would be near the $1.02 trillion peak posted in July 2008. The balance is rising because banks are raising credit limits and giving out more cards. Returns on assets for credit cards could rise to between 4.25% and 4.5% this year, up from 4% last year, according to consulting firm R.K. Hammer. That compares to overall ROA for banks of 1%. An improving job market and steady economic conditions (but no wage growth) have made U.S. consumers more willing to take on credit card debt. Lenders have also added more subprime borrowers. Credit cards give banks a source of income amid rock-bottom interest rates. And delinquency rates are manageable for the time being.

"We'll continue to take this opportunity as far as it will take us," said Richard Fairbank, CEO of Capital One Financial, one of the biggest credit card issuers. American Express is known for targeting consumers who pay off their balance each month, but even Amex is branching out to customers who keep a balance and pay monthly interest fees.
Citigroup and Discover Financial Services have expanded to subprime borrowers, requiring them to make a deposit that equals the credit limit of their card. 

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