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Credit card companies have a bad reputation for how they treat consumers. And they deserve it!!

(I asked Gemini for a review of how these companies make money… Here’s a quick screenshot of how credit cards profit from YOU, the consumer.)

Few other industries knowingly and blatantly prey on their customers — hoping their customers slip up and make a mistake — so they can charge unreasonable fees and rake in huge profits.

But that’s exactly how the credit card industry works!

And while most of the time, customers like you and me have to simply accept the poor situation, today’s business dynamics gives us an upper hand!

Today, I want to show you how a shifting landscape gives YOU a chance to make money from THEIR challenges!

Tough Times for Credit Cards

Friday’s weak jobs report raised some major concerns for the health of our economy.

In case you missed it, the Bureau of Labor Statistics reported that the U.S. economy added 73,000 jobs during the month of July — far fewer than the 115,000 economists were expecting.

Perhaps more ominous were the revisions to the May and June figures. These revisions cut a combined 258,000 jobs from previously reported gains in the second quarter.

Other concerning factors include stagnant wage growth, an unchanged labor force participation, and increasing long-term unemployment.

The weakening job market is coming at a time when even affluent consumers are now having difficulty paying credit card bills. And if the job market continues to deteriorate, credit card companies could face defaults and be forced to write down the value of their credit card receivables.

Meanwhile, a weakening economy is putting pressure on the Fed to cut interest rates. Following Friday’s jobs report, the odds of a Fed rate cut in December surged to more than 80%.

Lower rates would in turn put competitive pressure on credit card companies to charge (modestly) lower rates on credit card balances. And this would eat into company profits.

In short, there are challenges both to credit card companies’ balance sheets and income statements. And I expect these risks to drive stock prices lower.

Let’s take a look at how you could profit from weakness in these stocks!

Two Credit Card Stocks to Watch

Ironically, Visa (V) and Mastercard (MA) are not particularly vulnerable to the risks we’ve been discussing. That’s because these companies provide the network for processing credit card transactions, but they don’t focus on loaning money to consumers.

The two vulnerable companies I’ve got my eye on today are Capital One Financial (COF) and Synchrony Financial (SYF).

Capital One is known for offering credit cards to consumers who may not qualify for offerings from more traditional bank cards. The company also acquired Discover Financial earlier this year, giving it exposure to a very large population of borrowers.

Synchrony Financial is the largest provider of private label credit cards. You may have a card through Synchrony without knowing it. (For example, my “Amazon” credit card is offered through Synchrony Financial.)

Both of these stocks are vulnerable if a weakening economy makes it more difficult for customers to repay balances and if interest rates pull back.

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