Getting Current on Pricing in the U.S. Credit Card Debt Purchasing Market

March 10th, 2008

The U.S. debt purchasing market has experienced a significant increase in sales volume over the past six months, particularly within the credit card sector, which continues to generate roughly 80% of the total U.S. debt purchasing activity. The driver of this increased activity is a substantial reduction in portfolio prices across all stages of delinquency.

The following table summarizes the change in price ranges that have been shared with us anecdotally by debt buyers, and confirmed through recent portfolio transactions within the credit card sector. Certain transactions are occurring outside of these price ranges, and these typically involve forward-flow arrangements and one-off situations in which historical collection activity and liquidation results justify a higher sales price.

Price Range a Year Ago Current Price Range % of Price Range Change

$.12 – $.17

$.09 – $.12

10% – 30%


$.08 – $.12

$.05 – $.08

20% – 33%


$.055 – $.09

$.03 – $.05

25% – 40%


$.03 – $.05

$.01 – $.03

25% – 50%


$.01 – $.025

$.005 – $.015

25% – 50%

The primary reasons for the reduced prices include an increase in sales volumes and a decline in liquidation rates. Sales volumes have increased significantly because many credit issuers have seen their charge-off rates rise as a result of the sub-prime mortgage meltdown and recessionary economic conditions, and are feeling pressure to liquidate their delinquent accounts more quickly. Debt buyers who have historically utilized the re-sale market as part of their liquidation strategy are also trying to sell portfolios, but most of these “re-sales” are experiencing higher price discounts than portfolios acquired directly from credit issuers because they lack documentation and have already been serviced by at least one purchaser.

The current market conditions are also to blame for the reduced portfolio liquidation rates, as most debtors no longer have access to their home equity lines to pay off or settle their debts, and they have less disposable income for monthly debt payments because of higher food, fuel and utility costs.

While most debt buyers are ecstatic about the price reductions, and as a result have substantially increased their debt purchasing levels, some are taking a more conservative approach to debt buying and believe that price reductions still have farther to go before appropriate rates of return can be realized. Some of these debt buyers believe that prices may fall back to their pre-2002 levels when fresh paper traded for $.06 or less – if the real estate market and economic conditions continue to decline throughout 2008. While this perspective has merit given everything we are reading in the news these days, my predictions for the rest of 2008 are less severe, and include the following:

  • Prices for fresh and prime portfolios will either remain in their current ranges or potentially decline another 5-10%
  • Secondary and later-stage portfolios may decline an additional 10 – 20%
  • The re-sale market will start to pick up again in the second half of the year as more debt buyers become attracted to the acquisition opportunities

My predictions assume that the revised price ranges already take into account the impact from the current economic and market conditions and the potential for further degradations in the portfolio liquidation rates. They also allow for some level of further price declines if the market conditions become worse than what debt buyers have budgeted into their pricing. I also acknowledge that debt buyers will eventually be inspired to return to the re-sale market to seek out better acquisition opportunities than what is available from credit issuers.

It is clear that the U.S. credit card debt purchasing market has undergone substantial changes in the past six months, and while I can’t predict with 100% accuracy what the rest of the year will hold, I do believe that, barring a major recession or spike in the unemployment rate, the reduced price ranges will be enjoyed for the rest of 2008 and will continue so long as we endure the current economic and market conditions.

Comments are closed.


Suggestions for my High School Graduate

June 20, 2017

High school graduation is a time of excitement for many as they head off to college. Today, I thought I'd share some of the advice I gave my youngest son in case anyone else has a child preparing to go off to school sometime soon. ....

» see this post    » all posts

ARM Industry Merger and Acquisition Trends

June 14, 2017

Do M&A trends within the ARM industry defy traditional business and economic theories? Today's KG Prime sponsored blog examines industry performance from 2007-present, and the effect changes in operating conditions had on consolidation trends. ....

» see this post    » all posts

The Department of Education Contract: A Candid Discussion between Industry Experts Mike Ginsberg and Randy Kamm

June 13, 2017

The Department of Education unrestricted debt collection contract procurement process seemingly has no end in sight. Industry experts Mike Ginsberg and Randy Kamm examine the current situation, and the decisions that brought us to where we are today. ....

» see this post    » all posts


Kaulkin Ginsberg Moves Its Market Intelligence Online

June 8, 2017

Kaulkin Ginsberg is changing the way busy owners, executives, and senior leaders access strategic market intelligence with the launch of KG Prime. KG Prime is a comprehensive and easy to use web-based service that provides users with economic, market segment, and other forms of strategic research.....

» see more

AXIAL FORUM - Publishes "Succession Planning - A Critical Missing Element in Many Family-Owned Businesses"

June 7, 2017

AXIAL FORUM, a web-based strategic mediator for the M&A industry, recently published an article succession planning by Topline Valuation Group. This article was co-authored by members of the Topline Valuation Group and Kaulkin Ginsberg team....

» see more

ACA of Texas Publishes "Three Critical Healthcare Industry Trends for Outsourced Business Services" in its Winter 2017 Magazine

March 16, 2017

The ACA of Texas Publishes "Three Critical Healthcare Industry Trends for Outsourced Business Services" by Kaulkin Ginsberg in its Winter 2017 Magazine. Kaulkin Ginsberg details its belief that the growth in patient lending and financing programs, clinical integration networks, and physician quality reporting systems for the Centers for Medicare and Medicaid Services (CMS) could have profound effects on companies focused on servicing healthcare providers in 2017 and beyond.....

» see more