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Survey reveals issuer response to the CARD Act

When the CARD Act went into effect last year, compliance and rising delinquencies commanded the attention of card issuers, often at the expense of revenue-generating activity. A recent FICO client survey asks: have issuers turned the corner?

To find answers, we asked a range of both large and small issuers to share what they're doing in response to the CARD Act. While it was a somewhat informal survey of clients, the results highlight some revealing industry trends. Here's what we found:

Overlimit authorizations

  • 50% of issuers surveyed made changes to authorizations within the previous six months.
  • Of this 50%, most changed authorizations to be more conservative; only 12% changed segmentation to be less conservative.
  • Only 16% of issuers are proactively flagging overlimit opt out customers.
  • 45% are allowing overlimit activity by cardholders.

Credit line management

  • Only a small fraction of issuers surveyed have resumed automated credit line increases. However, we expect this number to increase in the coming months, as more issuers resolve how to incorporate ability to pay.
  • 69% are manually processing line increase requests.
  • 40% are looking into using an income estimator in the hopes of automating line increases.


  • Over 50% of issuers are currently increasing APR at 2 missed payments.
  • Another 28% concluded penalty pricing at that stage is not profitable, and turned it off.
  • Only 33% are looking into prospective balance/protected balance pricing. Of those not pursuing it, most had concerns about limited profit potential since they can only apply APR increases to future purchases, not existing balances.

Overall, most issuers continue to adopt an extremely conservative approach to ensure compliance, often sacrificing revenue as a result. However, some issuers are refocusing on revenue growth, especially large issuers with strong internal IT and good access to capital. For example, most issuers shut down authorization overlimit strategies when the Act first took effect; some have now slowly begun to allow accounts to resume overlimit activity. In addition, some issuers have incorporated ability to pay factors and resumed automated credit line increases.

The area of pricing remains a particular challenge, with few issuers exploring new strategies like prospective balance/protected balance pricing. Pricing may very well be an area of opportunity for issuers. Some may find value in developing new pricing methodologies, particularly when it comes to new account pricing and improvements to their profitability segmentation.

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