It seems U.S. consumers have found a way to cope with historic inflation.

I’m not talking about making trips to the dollar store (more like the $1.25 store these days).

I’m talking about credit cards.

With credit-card use on the rise, debt levels are now outpacing price hikes, according to the Federal Reserve.

Today, I’ll reveal a company that’s profiting from America’s penchant for plastic…

One that benefits from billions of credit-card transactions — and is already beating the market by roughly sixty percent.

Credit Card Debt Is on the Rise

It doesn’t take much investigating to realize that Americans are relying more and more on credit cards. Just look at the data…

In Q3 2022, debt levels jumped more than eight percent, eclipsing the recent inflation rate, and reaching a fifteen-year high.

And as you might imagine, this rise in debt was due in large part to an increase in credit-card usage.

In 2014, outstanding balances on U.S. credit cards was less than $700 billion. But by late 2019, that figure had surpassed $900 billion.

Today, the amount continues to rise. In the most recent quarter, credit-card debt jumped fifteen percent from a year ago, reaching $930 billion.

According to the Federal Reserve, the latest year-over-year increase is the largest in more than two decades. And here’s the thing…

Imagine Profiting from this Trend

Credit-card spending is up. But credit-card delinquencies are only up slightly — up half a percentage point from a record-low level over the past two years.

This is a sign that most U.S. consumers are using their cards somewhat responsibly. And if you could get even a tiny slice of this action, you could potentially rake in the profits.

Just imagine earning two or three percent of every transaction. It’d be like having your very own money printing press!

And that’s what one company comes close to doing…

Visa

I’m referring to Visa (NYSE: V), the largest card-payment company outside of China.

VisaNet, the company’s card-payment network, handles more than half of all card payments — some ten trillion dollars’ worth of transactions annually.

VisaNet connects more than two billion debit, pre-paid, and credit cards.

It also manages more than two million ATMs and some 15,000 financial institutions across 200 countries.

It’s Not a Bank, It’s a Tech Company

Because it handles so many payments, Visa has gone to considerable lengths to ensure its VisaNet network is reliable. All payments flow through one of four massive data centers in Virginia, Colorado, London, or Singapore.

Each center is secure, and has the ability to generate its own power in emergencies. It’s also well protected against terrorist attacks, cyber criminals, and even natural disasters.

To be clear, Visa isn’t a bank. It doesn’t issue loans or send out cards that use its VisaNet system.

Instead, it licenses its technology and access to its network to banks, credit unions, and payment processors, taking a roughly two-percent cut from each transaction made over VisaNet — more than eighty billion transactions each year.

In other words, Visa is a tech company with a sophisticated backend enterprise, allowing the financial and retail industries to function, while taking a cut of their revenues.

A Strong Business

Visa’s stock surged during the Covid bull market, particularly as the pandemic brought on a rise in online payments. But it’s since fallen back to Earth.

Still, this is a financially stable business, boasting a whopping eighteen billion dollars in cash flow and an unheard-of sixty-one percent cash-flow margin.

In FY 2022, Visa brought in sixteen billion dollars in profit at a fifty-five percent margin. Additionally, the company’s been growing earnings by double-digits for years.

This is an intriguing investment opportunity, especially considering the company’s current President will take the reins as CEO in February 2023.

A change in leadership could be a great catalyst for Visa’s stock, which has already performed well in recent years…

Profit All the Way to the Bank

Over the past five years, Visa’s stock has shot up eighty percent. Compare that to the S&P 500, which has gone up forty-three percent over the same period.

Simply put, Visa is uniquely positioned to cash in on America’s rising digital-payments habits…

And by investing in this company, we can aim to ride our profits all the way to the bank.

Want a chance to make even bigger profits from this opportunity?

Check out our “Trade of the Day” below.

Cheers and Good Investing,

Chief Investment Officer
Trend Trader Daily

Tags: credit-cards visa