After Bank of America saw $4.5 billion in credit card losses in the first nine months of 2009, the new chief executive will be taking his position next week and one of the first priorities will be to fix is the bank’s credit card business. According to new CEO, Brian Moynihan, his main priority is to get his hands around the problem as soon as possible.

Card Population Control

As the second-largest U.S. credit card issuer, after J.P. Morgan Chase & Co., the bank has a lot of cards that have circulated to the public. In fact, according to the CEO, there are too many card users in general population. His goal is to reposition the business so that it will rely less on borrowing and more on card transactions, even though it may result in fewer profits than the 23 percent that the card division currently brings into the company.

Adjustments Will Be Made

According to the bank, in addition to placing a greater emphasis on card transactions, it plans to:

  • Make faster decisions with delinquent customers: The bank said it took too long to cut credit lines on delinquent customers; however, it will make this adjustment in the new year.
  • Reduce the number of cards it sells to one customer: In the past, branch employees and managers were paid based partially on how many different products they could sell to existing customers. Now, the bank wants to sell multiple products to one household versus one customers to help reduce the likelihood of default and encourage responsible financial practices.
  • Have customers work with “personal bankers” to obtain cards: Instead of having customers obtain credit cards through bank tellers, now B of A plans to have customers step out of line and work with a personal banker elsewhere in the branch who will engage in a more in-depth conversation about the credit card application process and better determine who is eligible to receive a card.

The new CEO hopes that these adjustments will help create better experiences for customers who obtain Bank of America credit cards and ensure that the bank is able to make profits in the New Year.

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