Credit card managers often have an annual business development goal in place of expanding their loan portfolios. In practical terms, a good year requires the issuer to offset voluntary and involuntary attrition with new account bookings, with a 6% to 8% net growth model. In normal years, attrition is approximately 15%, with half of the account closures resulting from individuals leaving voluntarily, and the other half due to the credit card being 60+ days delinquent and subsequently closed. For a bank with just one million credit cards, the calculus is 1,000,000 cards minus 150,000 closed cards, plus 80,000 new accounts. That means the credit card manager’s new account goal is 230,000 new accounts.
DOGE published an update on its efforts to trim card-related spending at X.Com, where more than 30 federal agencies were identified. Usage values vary, with one estimate of 6 million government credit cards linked to 90 million transactions. MSN, Newsweek reported on the latest progress, which marks a recent step toward final closure, including the reduction of credit limits to $1.
So, What to Do When You Need Sundry Supplies?
Just like consumer credit cards, small business credit cards, and corporate credit cards, government agencies also need credit cards to perform routine tasks. There are numerous business cases where FEMA, the domestic emergency relief agency, may require access. Similarly, a National Park staff member might need a can of bear repellent at Yellowstone National Park. And, the Department of Education? So many different and diverse needs. (You can read more about small business credit cards here, and commercial credit cards here.)
But for now, think about the chaos of handling routine purchases by agencies that protect the vulnerable, feed the hungry, or provide basic human requirements. Either we will need to stock up on products like bear spray for national parks, warehouse necessary products, or lean on to federal employees to fill the void with their own card products. In the meantime, DOGE will need to establish an efficient process to settle necessary expenses.
For credit card managers, the task will be to mitigate credit card attrition in their respective government sectors. It is a good time to discern if you want to align with government-issued cards, plan for a federal product rebid, or ignore the request. Prepare for similar actions if this goes to the state or municipal level!
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