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Credit card issuers' risk assessments should include monitoring overextended cardholders, who increasingly are choosing to "selectively default" on certain loans, including skipping payment on certain credit cards, says Ramsey El-Assal, senior management consultant at MasterCard Advisors, MasterCard Worldwide's consultancy arm. To manage the rising risk from consumers who can pay but who decide against doing so, El-Assal advises issuers to segment accounts by FICO score and "spend/payment" history, then examine cardholders' total categories and quantities of debt to identify at-risk cardholders. "This analytical approach should be coupled with outbound communication by telephone or other channel because only the customer can provide the full context and background that will enable issuers to evaluate the feasibility of remedies on a case-by-case basis," he says. "While customers who already have defaulted are understandably cautious when dealing with collection agents, those who are at risk of default but not yet quite there, are often more receptive to exploring solutions." Cardholders are most likely to maintain payment on their top-of-wallet credit cards, but other cards are more vulnerable to default, El-Assal notes. "A borrower's primary card is likely to be the one that has been open the longest and has both the highest credit line and the highest percentage of that line utilized," he says. "That makes it a tougher, costlier obligation to abandon."

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