4 Credit Card Stocks to Buy as Consumer Spending Remains High
StockNews
Published Jul 02, 2021 11:02AM ET
Updated Jul 02, 2021 12:30PM ET
4 Credit Card Stocks to Buy as Consumer Spending Remains High
Because consumers have lately been spending increasing amounts on services and experiences that had been denied them by the COVID-19 pandemic, and on discretionary items that they could not afford last year due to unemployment, credit card transactions are on the rise. So, we think it could be wise to bet on shares of credit card companies American Express (AXP), Capital One (COF), Discover (DFS), and Synchrony (SYF). They are well positioned to capitalize on this trend.Credit card usage and other online payment methods increased significantly over the past year as people increasingly relied on digital modes of payment necessitated by their remote lifestyles. But with the fast-paced economic recovery this year—aided by rapid coronavirus vaccinations—spending on services and discretionary items has increased significantly. According to the Commerce Department, overall consumer spending remained flat in May because a $71.5 billion decrease in spending for goods was balanced by a $74.3 billion jump in spending on services.
Furthermore, according to The Conference Board, the consumer confidence index stood at 127.3 points in June, up from 120 points in May. Strong consumer confidence is expected to translate into more spending, implying a greater use of credit cards. Accelerating technological innovation and rapid adoption of digital prepaid card services could also drive the growth of the credit card market in the coming months. According to Research and Markets, the global credit card market is expected to grow at a 3% CAGR to hit $103.06 billion in 2021.
So, we think it could be wise to bet on shares of established credit card companies American Express Company (NYSE:AXP), Capital One Financial Corporation (NYSE:COF), Discover Financial Services (NYSE:DFS), and Synchrony Financial (NYSE:SYF) because they companies are well positioned to capitalize on increasing consumer spending.
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