How Profitable are Credit Cards?

In 2019, 75% of US households had at least one general purpose credit card. Revolving consumer credit at the end of 2021 was over $1 trillion. In this context, the US Federal Reserve has issued a FED Notes on credit card profitability ¹.

While most analysis uses bank-level regulatory data, which means the best that can be achieved is bank-level profitability to be calculated, this study uses data on the credit card portfolios of some of the largest credit card lenders in the US. The data covered 80% of the cards issued. Based on this, the study looks at the drivers of profitability to understand both sources of profit and the business model of credit cards from the perspective of both issuers and borrowers.