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Credit Cards - US - July 2018

OVERVIEW
What you need to know
Definition
EXECUTIVE SUMMARY 
Overview
The issues
Outstanding credit crosses the $1 trillion mark
Figure 1: Revolving consumer credit outstanding, at current prices, 2013-Q1 2018
Young people don’t like credit cards
Figure 2: Attitudes toward credit cards, by generation, May 2018
Trust is still an issue
Figure 3: Attitudes toward credit cards, May 2018
The opportunities
Younger people are becoming more comfortable with debt
Figure 4: Percentage of consumers with credit card debt, by age, June 2012-June 2017
Use rewards to attract young consumers
Figure 5: Motivations to apply, by age, May 2018
Integrate money management into card usage
Figure 6: Attitudes toward credit cards, May 2018
Target young cardholders to switch to mobile wallets
Figure 7: Credit card behavior, by age, May 2018
What it means
THE MARKET – WHAT YOU NEED TO KNOW
Debt totals continue to grow
The number of credit card accounts is up
Most people have credit card debt
Direct mail acquisition volume is trending down
Alternative payment options affect card use
MARKET SIZE 
Total outstanding revolving debt tops $1 trillion
Figure 8: Revolving consumer credit outstanding, 2013-Q1 2018
Growth in number of credit card accounts
Figure 9: Number of credit card accounts, Q4 2012-Q4 2017
Most Americans have credit card debt
Figure 10: Percentage of consumers who have credit card debt, June 2012-June 2017
Figure 11: Percentage of consumers with credit card debt, by age, June 2012-June 2017
MARKET PERSPECTIVE
Direct mail acquisition volume is trending down
Alternative payment options affect card use
MARKET FACTORS 
Unemployment
Figure 12: Unemployment rate, April 2013-April 2018
Federal funds rate continues to increase
Figure 13: Federal Funds rate, April 2017-March 2018
Consumers are optimistic about their financial situation
KEY PLAYERS – WHAT YOU NEED TO KNOW 
Contactless cards are growing in popularity
Uber targets Millennials
Chip cards are helping reduce in-store fraud, but increase online fraud
Moving cardholders to mobile wallets
Virtual credit cards
Biometric credit cards
Cryptocurrency rewards
WHAT’S WORKING?
Contactless cards are growing in popularity
Uber targets Millennials
WHAT’S STRUGGLING?
Chip cards are helping reduce in-store fraud, but increase online fraud
Figure 14: Online shopping frequency, by generation, March 2018
Moving cardholders to mobile wallets
WHAT’S NEXT?
Virtual credit cards
Biometric credit cards
Cryptocurrency rewards?
THE CONSUMER – WHAT YOU NEED TO KNOW 
Only half of young men have a credit card
Retail cards are favored by female cardholders aged 45+
Most have little or no credit card debt
Qualifying is not the issue
Many use cards to pay bills
Most think cards are useful, but are wary of security
Hispanics are warier of credit
CREDIT CARD OWNERSHIP
Only half of young men have a credit card
Figure 15: Credit card ownership, by gender and age, May 2018
Hispanics have fewer financial products, including credit cards
Figure 16: Financial product ownership, by Hispanic origin, May 2018
Retail cards are favored by female cardholders aged 45+
Figure 17: Type of card owned, by gender and age, May 2018
Age more of a factor in general purpose card ownership
Figure 18: Type of card owned, by age, May 2018
HOW MUCH DO CARDHOLDERS OWE?
Most have little or no credit card debt
Figure 19: Amount of credit card debt, by number of cards owned, May 2018
More than half with highest credit score have no credit card debt
Figure 20: Amount of credit card debt, by credit score, May 2018
WHY NO CREDIT CARDS?
Qualifying is not the issue
Figure 21: Reasons for not having a credit card, May 2018
Young people are more responsive to rewards
Figure 22: Motivations to apply, by age, May 2018
TURF ANALYSIS
Methodology
It isn’t easy to encourage card ownership
Figure 23: TURF analysis – Motivations to apply, May 2018
CREDIT CARD BEHAVIOR
Many use cards to pay bills
Figure 24: Credit card behavior, May 2018
Figure 25: Discover email, November 2017
Figure 26: American Express email, December 2016
Mobile wallets are much more popular among young cardholders
Figure 27: Credit card behavior, by age, May 2018
Behaviors differ according to credit score
Figure 28: Credit card behavior, by credit score, May 2018
ATTITUDES TOWARD CREDIT CARDS
Most think cards are useful, but are wary of security
Figure 29: Attitudes toward credit cards, May 2018
Figure 30: Citibank email, May 2018
Young people prefer debit to credit
Figure 31: Attitudes toward credit cards, by generation, May 2018
Figure 32: Fifth Third credit card direct mail, February 2018
Hispanics are warier of credit
Figure 33: Attitudes toward credit cards, by Hispanic origin, May 2018
Trust is still an issue
Figure 34: Attitudes toward credit cards, all, May 2018
Income affects attitudes toward cards
Figure 35: Attitudes toward credit cards, by household income, May 2018
CHAID ANALYSIS
Young men are most receptive to storing credit card information
Figure 36: Attitudes toward credit cards – CHAID – May 2018
Methodology
Figure 37: Attitude towards cards – CHAID – Table output, May 2018
CLUSTER ANALYSIS
Figure 38: Credit card clusters, May 2018
Cluster 1: Credit Averse
Cluster 2: Credit Cautious
Cluster 3: Credit Lovers
Figure 39: Chase Sapphire Reserve email, October 2017
APPENDIX – DATA SOURCES AND ABBREVIATIONS
Data sources
Sales data
Consumer survey data
Direct marketing creative

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