At the Banks Not at Home
I noticed a while ago that my Citi Mastercard was going to become a CIBC Mastercard, in the near future. This is interesting as I used to have a CIBC Card, and the Citi Mastercard, was previously CT Mastercard (but when TD bought CT, then Citi bought the CT Mastercard business). Confusing isn’t it (I am surprised I even remember this).
Yesterday I noted that TD is now buying the Canadian Credit Card operations of the Bank of America, so if you have a Bank of America card (MBNA) , it will most likely be turning into a TD Visa card (some time in the future), and TD is putting upwards of $100 Million into this transaction (in purchase price and debt assumed, etc.,).
As a TD Shareholder this is good because it doubles TD’s penetration into the market, but bad because a lot of the MBNA card holders are higher riskfolks as well, but TD says they will be running off about $2Billion worth of customer debt over 2 years because of these risks (which sounds
prudent). Whether they are simply going to write off the debt, is not clear to me, but hopefully they will simply close off the accounts after they are paid off (maybe that is being a little too optimistic in most cases). Another option would be to sell the debt to collection agencies (a little more drachonian, but possible as well).
With more consolidation of the credit card business does this mean there is still a lot of money to be made off credit cards? I think the market is telling us that yes there is more money to be made.
I hope this means I will have less credit cards in my wallet, but then again I could fix that one myself by cancelling a few of them myself.
It will be interesting to see if there are more of these kind of credit card consolidations for the Bank side of things.