Credit and Debit Card Ratings

A Card Level View Of The Economy Indicates Consumer Confidence On Upswing

It’s safe to say that we all have economic indicators that we like to examine in order to gauge the health of the overall economy.

By Shane Tripcony

For professional economists and academics, of course, there are reams of data about arcane sounding things like durable goods orders that help them determine whether the economy in the U.S. is healthy or ailing. For regular folks, though, the way to divine whether the American economic picture is brightening or darkening is through more subtle observations, like whether or not a favorite restaurant is bustling or the presence (or absence) of “for lease” signs along main street.

But given the prevalence and use of credit cards in the U.S. economy, another solid indicator is the spending habits Americans have with their plastic. And that’s just what the quarterly Chase Freedom Lifestyle Index reports by tracking and sharing exactly how users of the Chase Freedom credit card truly spend their money. Chase, which is the consumer and commercial banking unit of JP Morgan Chase & Company, insists that this is a better way to measure overall consumer trends – and hence, the all-important mood of the consumers who power the U.S. economy – than more speculative opinion polls and surveys.

The most recent version of the Chase Freedom Lifestyle Index, which measures spending from the second quarter of 2013, indicates that consumer confidence is on the upswing, albeit ever so slightly. Indeed, the index reports that year-over-year spending ticked up one percent from the second quarter of 2012 compared to the same time period this year. But once you dig down a bit more into the data, individual sectors of the economy seem to be doing both much better and worse than that general measure.

For instance, spending on things like sporting goods and museums both rose by seven percent year-over-year, along with lessons and classes and books, which rose by six percent and eight percent, respectively. Most striking was a 14 percent rise in spending in the costume retail category, which seems to point to a busy prom and wedding season. Still, not all categories saw increased spending. Spending on gas slumped by seven percent from 2012 to 2013, as did the amount of money shelled out for consumer electronics.

Even though no individual reading of the direction and strengths of the economy is complete by itself, this latest data dump by Chase adds to a growing body of evidence that the economy is moving (however slowly) in the right direction.

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  • A Card Level View Of The Economy Indicates Consumer Confidence On Upswing

    A Card Level View Of The Economy Indicates Consumer Confidence On Upswing

    It’s safe to say that we all have economic indicators that we like to examine in order to gauge the health of the overall economy.

    By Shane Tripcony

    For professional economists and academics, of course, there are reams of data about arcane sounding things like durable goods orders that help them determine whether the economy in the U.S. is healthy or ailing. For regular folks, though, the way to divine whether the American economic picture is brightening or darkening is through more subtle observations, like whether or not a favorite restaurant is bustling or the presence (or absence) of “for lease” signs along main street.

    But given the prevalence and use of credit cards in the U.S. economy, another solid indicator is the spending habits Americans have with their plastic. And that’s just what the quarterly Chase Freedom Lifestyle Index reports by tracking and sharing exactly how users of the Chase Freedom credit card truly spend their money. Chase, which is the consumer and commercial banking unit of JP Morgan Chase & Company, insists that this is a better way to measure overall consumer trends – and hence, the all-important mood of the consumers who power the U.S. economy – than more speculative opinion polls and surveys.

    The most recent version of the Chase Freedom Lifestyle Index, which measures spending from the second quarter of 2013, indicates that consumer confidence is on the upswing, albeit ever so slightly. Indeed, the index reports that year-over-year spending ticked up one percent from the second quarter of 2012 compared to the same time period this year. But once you dig down a bit more into the data, individual sectors of the economy seem to be doing both much better and worse than that general measure.

    For instance, spending on things like sporting goods and museums both rose by seven percent year-over-year, along with lessons and classes and books, which rose by six percent and eight percent, respectively. Most striking was a 14 percent rise in spending in the costume retail category, which seems to point to a busy prom and wedding season. Still, not all categories saw increased spending. Spending on gas slumped by seven percent from 2012 to 2013, as did the amount of money shelled out for consumer electronics.

    Even though no individual reading of the direction and strengths of the economy is complete by itself, this latest data dump by Chase adds to a growing body of evidence that the economy is moving (however slowly) in the right direction.

  • Green Dot Posts Solid Results Despite Increased Competition

    Green Dot Posts Solid Results Despite Increased Competition

    By Shane Tripcony

    One of the most prominent messages on the homepage of Green Dot Corporation, a longtime issuer of prepaid debit cards, is a simple one. “Big Banks, No Thanks,” blares a nearly screen-sized headline, which alternates between a promotional message about something consumers likely care a good bit more about: a chance to win a year of free gas.

    In many ways, this short, punchy salvo – which is buttressed with the message, “The Green Dot Card is the smart and easy way to manage your money,” along with a 5- question quiz that purports to answer whether a Green Dot Card is right for you – says an enormous amount about the state of the prepaid debit card industry today. It’s hardly a new flash to readers of this site, but large financial institutions of all sorts, including American Express and JP Morgan Chase, have begun offering prepaid debit cards in hopes of grabbing a slice of this quickly expanding and lucrative market.

    For prepaid debit card consumers, the attention of big financial players has been an undeniably good thing: fierce competition among rivals, some of whom are willing to forgo chunks of revenue in the short-term in order to gain market share, have put much needed downward pressure on fees and increased overall transparency. But longstanding industry players like Green Dot could be forgiven for not being thrilled with the prospect of tough competition that threatens to eat away at their profits.

    Still, Green Dot’s web page swipe at its competitors isn’t exactly an effort to mask the company’s weakness. In fact, on July 30 of 2013 the company announced results for the second quarter and Green Dot seems to be holding its own just fine, thank you. Indeed, the California-based company reported net income of $11.3 million for the quarter, which was 4 percent higher than the same period in 2012. Additionally, revenue topped $142million, which was also 4 percent higher than the previous year. At the same time, Green Dot provided an improved full-year guidance, announcing that it expects operating revenue to come in somewhere between $565 million and $575 million and earnings per share to be in the $1.05 to $1.20 range. The better than expected results prompted Green Dot’s shares to jump 16 percent the day after its announcement.

    “Despite aggressive competition from large financial services companies and rigid self-imposed risk controls that materially reduced new customer enrollment, we believe Green Dot remains the clear leader in the prepaid space and is well positioned for the future,” said the company’s CEO Steve Streit. And far from going on the defensive, Green Dot also unveiled a distribution partnership with the likes of Home Depot and Dollar General, which will up its nationwide presence by about 20,000 retail locations.

    None of this is to say that Green Dot doesn’t face challenges, as Motley Fool contributor Jordan Wathen goes at lengths to explaining a recent post, citing in particular the threat posed by American Express Company’s Bluebird card. But whatever the threats may be, it seems clear that Green Dot won’t be going away quietly.

Credit and Debit Card Ratings