Wachovia Gearing Up to Re-Enter Credit Card Market

Filed in archive Credit on May 26, 2006

This press release about Wachovia choosing a credit card processor is bo-ring, but it's actually pretty important in my view.

Wachovia offers credit cards, but they are one of many banks that slaps its name on a credit card that is really issued by someone else--in this case, MBNA.

When MBNA was bought by bank of america to create the biggest credit card issuer the world has ever known, Wachovia said, "Yo, hold up, if you're getting acquired, we're ending our partnership."

So they did, and that's good, because the endless consolidation in the industry means that 5 or 6 companies own 90% of the market (or something like that). Look on Index Credit Cards and you'll see the listings are dominated by Bank of America/MBNA, Citi, Chase, American Express and Discover.

Other banks show up here and there, but if you are looking for special deals, rewards, etc., you only have a handful of options in issuers, which makes it easier for the industry to do things like raise rates, late fees, etc. There's not enough competition, and it's too easy to justify new fees by saying they're "competitive" within the industry.

So I'm looking forward to another major player in the industry, and I think Wachovias is going to fill that role.