Credit unions sold 22 credit card portfolios last year, and while the total number of deals was the same as the previous year, the total asset value of the portfolios sold more than tripled, card-portfolio consulting firm TRK Advisors says.
The Peterborough, N.H.-based firm says the total asset value of card portfolios credit unions sold last year was $328 million compared with $100 million in 2008. The firm measured only credit union card portfolios with at least $1 million in accounts receivable.
Sales still remain below the pace of the years 2004-2007, when some 60 to 70 credit unions sold portfolios each year, Timothy R. Kolk, the firm’s president, tells PaymentsSource. Large bankcard issuers also saw decreased portfolio sales last year (
The economic downturn is dampening the pace of deals, Kolk says, because most card portfolios on the block carry a relatively high risk of charge-offs and defaults. Potential buyers also remain uncertain about the long-term effects of the Credit Card Accountability, Responsibility and Disclosure Act, which went into effect last month.
Consumers’ growing preference for using debit cards for everyday purchases is also helping to slow credit card portfolio sales activity, Kolk says.
“Generally, the industry continues to see migration from credit card purchases to debit card instead. This also pushed credit card spending (and revenues) down.”
In the past, “all big banks used to be optimistic about portfolios and offered wild prices,” Kolk says. That changed over the last two years, when supply outstripped demand.
Since 2001, some 400 credit unions have sold card portfolios whose total value exceeds $300 billion, the firm says.
