The Profitability of Credit Card
Operations of Depository Institutions
An Annual Report by the Board of Governors of the
Federal Reserve System, submitted to the Congress
pursuant to Section 8 of the Fair Credit and Charge
Card Disclosure Act of 1988.
June 2002
1. P.L. 100-583, 102 Stat. 2960 (1988). The 2000 report covering 1999 data was not prepared as a
consequence of the Federal Reports Elimination and Sunset Act. The report was subsequently reinstated
by law.
2. The increase in market share of the credit card banks primarily reflects growth in assets among firms
that were identified as large credit card banks in earlier years. Some of this growth was achieved by the
purchase of other lenders’ portfolios, some by internal growth of existing and new credit card plans. In
addition, three institutions were added to the panel of credit card specialists for the year 2000, replacing
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Section 8 of the Fair Credit and Charge Card Disclosure Act of 1988 directs the Federal
Reserve Board to transmit annually to the Congress a report about the profitability of credit card
operations of depository institutions.1 This is the twelfth report. The analysis here is based to a
great extent on information from the Consolidated Reports of Condition and Income (Call
Report) and two Federal Reserve surveys, the Quarterly Report of Credit Card Interest Rates and
the Survey of Terms of Credit Card Plans.
Call Report Data
Every insured commercial bank files a Call Report each quarter with its federal
supervisory agency. The Call Report provides a comprehensive balance sheet and income
statement for each bank; however, it does not allocate all expenses or attribute all revenues to
specific product lines, such as credit cards. Nevertheless, the data may be used to assess the
profitability of credit card activities by analyzing the earnings of those banks established
primarily to issue and service credit card accounts. These specialized banks are referred to here
as "credit card banks."
For purposes of this repo