Bank of America Expands Credit Card Program
Bank of America has spent the last few years trying to clean up its credit card portfolio after a series of bad loans issued in 2009. The company got rid of the most risky accounts and decreased its total loans by 62%. Now it appears to be switching gears.
Bank of America is targeting its existing customers with new credit card offers. The bank already has a relationship with these customers and knows about their spending habits. It can use that information to determine the best credit card customers.
Titi Cole, a senior executive at Bank of America, commented on the bank’s decision to work with existing customers, telling Reuters, “That was our biggest strategic choice. The card business will be smaller, but less volatile and more profitable.”
The new method seems to be paying off. The bank’s credit card balances went from $89.7 billion to $90 billion in the third quarter 2012, the first increase the bank has seen since 2009. The bank issued more than one million new cards during that time, and reports from the fourth quarter indicate further expansion.
As Bank of America works at offering more loans to its responsible customers, it should see a large return on investment. It is still too soon to say if this program will be a long term success, but the signs point to that being the case.