Companies like Amazon (AMZN) and Sears (SHLD) sell a lot of
products during the Christmas season. This is a given. But no one usually
considers who else profits from increased consumer spending (and overspending).
Credit card companies such as MasterCard (MA), Visa (V), and American Express
(AXP) not only see a higher usage of their cards, but they receive an
assessment fee from the retailer every time someone uses their card to make a
purchase. This is part of a transaction fee that retailers must pay for every
purchase, and it's usually already priced into the product.
Credit cards will continue to see heavy usage after the
holiday season with the help of low interest rates, which allow Americans to
borrow more. Last week, the FED decided not to taper quantitative easing
(contributing $85 billion per month to American banks while keeping interest
rates low) in order to compensate for the effects of the government shutdown -
that means financials, including the credit market. Read more.
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