MBNA hurt

MBNA (KRB) today blamed people using their homes as ATMs and paying their credit card debts early, for its lower earnings. This option to prepay early without penalty is a tough one to put a value on.

I made a mention of MBNA in an earlier post on leverage. MBNA has been the most generous one, when it comes to offering low APR balance transfers and cash advances. I made use of those offers to borrow and invest in takeover targets. Among the targets, MBNA itself!

At today's price MBNA is extremely attractive and I would be a buyer and so would be a few banks!

MBNA has been extremely picky in selecting cardholders (I know!) and that should help them when rates move up faster.