Which Companies are Hot (or Not)? It's All in the Cards

It's hard to separate credit cards from the holiday season anymore, and trends in the industry can mean a big boost to some companies during these high-traffic times, writes Odysseas Papadimitriou of the credit-card comparison website Card Hub.

The holiday season can make or break a business. Small retailers who typically make a large percentage of their annual sales from Thanksgiving through New Years are undoubtedly the most vulnerable, but no company is immune to the vagaries of the busiest shopping period of the year, especially with an uncertain economy.

So, as Santa double checks his list and shoppers everywhere hunt for deals, it's fair to wonder: Which companies will make the biggest splash this holiday season, and which could face a consumer backlash during the months to come? Here's how I see things through my personal finance lens:

Companies Poised to Make a Splash
American Express (AXP) and Walmart (WMT): Walmart has always been a big player during the holiday season, with its varied inventory and attractive Black Friday/Cyber Monday deals. In its own right, Amex has been as well by serving as the credit card of choice for affluent people with exemplary credit-someone has to buy all those bow-topped Lexus, after all (Lexus is apparently the plural of Lexus).

However, both companies are in an even better position to succeed this year, thanks to the recent launch of their joint prepaid card venture. Not only is the Bluebird Card from American Express and Walmart one of the best prepaid cards on the market, but it also serves a strategic purpose for both of the companies behind it.

The move turns Amex into a full-spectrum card issuer able to offer something of value to the roughly 34 million US households that are either unbanked or underbanked. Walmart can use the Bluebird Card to replace competitors' offerings in stores, but more importantly, it allows the company to bring the things people buy and the spending vehicles they use to buy them together under one umbrella. Doing so will inevitably lead people to spend more of their money at Walmart.

We also can't overlook the rising popularity of prepaid cards and the fact that we at Card Hub forecast a prepaid card boom in 2013.

Capital One (COF): In 2012, we saw Capital One complete its purchase of the majority of HSBC's (HBC) US credit card business-a significant boon for the company, because it makes them essentially the only major player in a sizable and largely untapped market.

Most major issuers are hesitant to offer credit cards to people with average credit history, but we can expect Capital One to thrive in the space, not only because it bought its only major competitor, but also because it boasts underwriting capabilities superior to those of any company that might decide to enter the market moving forward.

Businesses in Line for a Backlash
The companies behind the Worst Credit Cards of 2012: There are a number of decidedly unattractive credit cards out there that will be more of a drain on consumers' finances than a help, so don't count on their respective issuers gaining much traction anytime soon unless they change their strategies.

Among them are the First Premier Bank Gold Card, the US Bank College Visa Credit Card, the US Bank FlexPerks Select Rewards Business Card, the Visa Black Card (a not-so-cheap imitation of the famed Centurion Card from American Express), the Arvest Bank Classic Credit Card, and the UBS Preferred Visa Signature Card.

Check cashing stores: Check cashing stores have never been bastions for holiday cheer, as they've traditionally charged excessive fees for their services, adding to the burden of a historically low-income customer base. While their predatory pricing structure might never change, we expect check cashing stores to hemorrhage customers to prepaid card issuers moving forward.

Some of the newest additions to the prepaid card market-namely the Liquid Card from Chase (JPM) and the Bluebird Card from Amex and Walmart-allow cardholders to load checks to their cards as well as make cash withdrawals at a very low cost, and are therefore poised to be the check-cashing killers.

Ultimately, it's so important for companies to find success during the holidays because consumers tend to shell out hundreds of dollars on gifts, food, and decor each year before retreating into a type of spending hibernation where the focus is on chipping away at prodigious balances rather than adding to them. In other words, it can be months before it's possible to recover from a lethargic season of sales.

That bodes well for the businesses touched on in the first half of this article, while those unlucky enough to find themselves in the latter half will have to think outside of the box to make the most of their forthcoming lumps of coal. If they can't manage to do so, lackluster investing and losses in the court of public opinion could very well follow disappointing holiday sales figures.

Odysseas Papadimitriou is the CEO of Card Hub. Read more from him at CardHub.com.