Capital One could benefit from student credit card debt
While Capital One has seen the total value of its portfolio fall during the recession, Trefis, an investor services company, says the bank and lender could see increased profits based on a renewed willingness among consumers to take on credit card debt, particularly students.
Capital One recently introduced its Journal Student Rewards Credit Card, which offers users 1 percent cash back as well as monetary bonuses for timely payments. However, the card can come with interest rates as high as 19.8 percent.
Due in part to this new product, Trefis is now predicting the company’s credit card purchase volume could rise substantially over the next decade, NASDAQ reports. In total, the company predicts Capital One’s portfolio could be worth as much as $141 billion by the end of 2017.
This figure is up from its current value of $107 billion, the news source says. Currently, Discover Financial is the leading provider of credit cards to college students, and is the preferred lender of more than 750 schools, according to recent research.
However, since students are one of the primary targets for student loan and credit card debt – carrying an average of nearly $25,000 in debt by graduation – Capital One’s recent investment in this demographic could pay huge dividends.