As you know by now, I’m an avid reader of all news that has to do with money matters. My work as an Indiana consumer bankruptcy specialist for both small businesses and individuals makes it important for me to know as much as I can about what’s going on in the world of lending and borrowing. That way, I am better prepared to give the best and most current advice to my bankruptcy clients. In my blog a couple of months ago, I wrote about a relatively new phenomenon, which is people paying their everyday bills, including grocery and utility bills, using credit cards. (You can now charge even a Big Mac at MacDonald’s!)

Now at first glance, with all the people and the companies you read about that are filing bankruptcy because they couldn’t pay their bills, you’d think credit card companies (and Visa is the largest) would be suffering because of having to write down so much uncollectible debt. You might have been amazed to learn that just a little more than a month ago, VISA actually offered the largest IPO (initial public offering of stock) in our country’s history! And not only did the company choose to list their stock on the New York Stock Exchange during one of the worst times in the stock market that we’ve seen in a long while, the offering was unbelievably successful, raising almost $18 billion from investors! The initial share price was $44. (Remember that number, as I’ll come back to it at the end of this blog.)

The thing many folks don’t know about Visa is that it’s not actually a credit lender at all – it’s the world’s largest credit card processor. Big difference! Visa carries no consumer debt on its books. The company makes all its money from fees for processing transactions. And so, consumers using credit cards for everyday bills, (a bad sign of the times), is actually great news for Visa, because it has more transactions to process!

And what is Visa doing with all these billions of dollars it raised in the IPO? It’s buying back its own stock that it had sold to banks such as JPMorgan Chase, Bank of America, Citigroup, National City, and Wells Fargo. Those companies do have lots of consumer credit on their books, and a hefty percentage of that debt is not getting paid back to them by consumers. All those banks can really use the money. And Visa? In one month, their stock went from $44 to approximately $65! For the mathematically challenged among us (OK, I confess! I had to use a calculator.), that’s 48% gain in one month. Must be nice…