The U.S. credit card industry has found its sweet spot: a combination of moderate economic growth, low interest rates and consumers who have struck a balance between spending more and paying their bills on time, the Wall Street Journal reported today. The trends are expected to drive profits to post-recession highs at industry giants American Express Co. and Capital One Financial Corp. this year and bolster the bottom line at banks with big card units, including JPMorgan Chase & Co. U.S. card issuers will generate $158.6 billion in revenue this year, a 9 percent increase from 2013, according to estimates from R.K. Hammer, a consulting firm in Thousand Oaks, Calif., that focuses on the industry. It would be the first annual gain since 2008. The bright outlook reflects a change from five years ago when industry executives said that profits and the availability of credit would be hampered by a new federal law, called the Card Act, which put an end to certain industry practices. Among other things, the law restricted card issuers from raising rates on existing purchases if a customer was late on a payment.
