Table of Contents
Executive Summary
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- Impact of COVID-19 on credit cards
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- Figure 1: Short, medium and long-term impact of COVID-19 on credit cards, September 2020
- The market
- Market size and forecast
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- Figure 2: Forecast of gross credit card lending, 2015-25
- A recession like no other
- Contactless and COVID-19 are driving consumers from cash to cards
- COVID creates a consumer confidence paradox
- Companies and brands
- Barclaycard dominates the credit card market
- COVID-19 has demanded a rethink of credit card benefits
- Advertising expenditure falls three years running
- Barclaycard is the most trusted credit card brand
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- Figure 3: Key metrics for selected brands, June 2020
- The consumer
- Credit card holders are ageing
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- Figure 4: Credit card ownership, by age, July 2020
- Barclaycard dominates credit card ownership
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- Figure 5: Credit card provider, July 2020
- Credit cards serve a wide range of roles
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- Figure 6: How they use a credit card, July 2020
- One in five pay the minimum or whatever they can afford
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- Figure 7: Repayment habits, July 2020
- The importance of a physical card is dissipating
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- Figure 8: Important features when choosing a credit card, July 2020
- Banks are the most trusted source when it comes to credit cards
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- Figure 9: Most trusted sources of information when choosing a new credit card, July 2020
Issues and Insights
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- COVID-19 could prove a turning point for credit cards
- The shifting profile of credit card holders
- Building a credit card to re-engage young people
The Market – Key Takeaways
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- Credit card lending won’t return to 2019 levels until 2023
- An unbalanced recession and an uneven recovery
- Shift to ecommerce presents opportunities
- Rising discomfort with debt could prove a threat
Market Size and Forecast
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- Impact of COVID-19 on credit cards
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- Figure 10: Short, medium and long-term impact of COVID-19 on credit cards, September 2020
- COVID causes a severe drop in credit card usage
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- Figure 11: Forecast of gross credit card lending, 2015-25
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- Figure 12: Forecast of gross credit card lending at current prices, 2020-25
- Market drivers and assumptions
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- Figure 13: Key drivers affecting Mintel’s market forecast, 2015-24 (prepared September 2020)
- A very different recession
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- Figure 14: Gross and net credit card lending to individuals, 2007-12
- Forecast methodology
Economic Outlook
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- A recession like no other
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- Figure 15: Quarterly change in GDP, Q1 2008-Q2 2020
- Forecasts predict a bounce-back in 2021
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- Figure 16: Forecast of annual GDP, 2019-24
- Unemployment looks set to spike as government support unwinds
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- Figure 17: Unemployment rate, 2007-24
- Retail sales recover but the way people spend has changed
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- Figure 18: Year-on-year change in retail sales, by sector, January-August 2020
Market Environment
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- Credit card payments increase 7% in 2019
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- Figure 19: Payment volumes, 2015-19
- Increase to contactless payment limit drives adoption
- Credit card lending becoming a smaller part of the lending landscape
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- Figure 20: Segmentation of outstanding monthly lending to individuals, June 2015-June 2020
- Credit cards and overdrafts become more expensive
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- Figure 21: Consumer credit rates, January 2016-August 2020
Consumer Environment
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- COVID support creates a confidence paradox
- Household finances will become more exposed to the crisis
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- Figure 22: Consumer confidence tracker, January 2018-August 2020
- Consumers are increasingly focused on saving
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- Figure 23: Change in spending priorities between March and August 2020
- Consumers are feeling increasingly comfortable about eating out
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- Figure 24: Comfort with activities, July-September 2020
- Credit cards are preferred for high-value online purchases
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- Figure 25: Payment preferences, by type of purchase, November 2019
- Older Millennials are feeling more uncomfortable with their debts
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- Figure 26: Net – Any uncomfortable with current level of debt, by generation, June 2019 and May 2020
Regulatory and Legislative Changes
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- FCA focuses on ensuring consumer credit markets work well
- COVID-19 support made available
- SCA implementation delayed again
- Increase in contactless payment limit
- FCA clarifies advice for dealing with customers in persistent debt
- Ban introduced on using credit cards to gamble
Companies and Brands – Key Takeaways
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- Barclaycard dominates the credit card market
- COVID-19 has demanded a rethink of credit card benefits
- Taking a more holistic approach to the purchase process
- New credit card models can better compete with BNPL
- Alternative lending products leverage strong brands
Market Share
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- More than a quarter of credit card holders have a Barclaycard
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- Figure 27: Customer share of leading credit card lenders, 2017-20
- Leading players consolidate the market
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- Figure 28: Market share of credit card ownership, 2019 and 2020
- M&S Bank has the oldest customer base
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- Figure 29: Customer profile of credit card providers, July 2020
Competitive Strategies
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- Breaking down silos between Barclays and Barclaycard
- American Express’ focus on premium customers yields rewards
- COVID-19 demands extensions and changes
- Support for the community takes on fresh importance
- Creating a frictionless shopping experience
- A focus on fraud
- Cashback cards withdrawn from the market
Launch Activity and Innovation
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- Vitality Amex offers cashback for staying active
- Quantifying the environmental impact of credit card spending
- Credit card launches
- Zopa launches first credit card offering
- Jaja Finance replaces AA and Post Office-branded credit cards
- Australian banks ditch interest rates to compete with BNPL
- Fintechs eye credit card launches
- Cashplus adds the time and location of every payment made
- NatWest launches UK’s first biometric credit card
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- Figure 30: NatWest biometric credit card, October 2019
- Alternative lending products
- Koto launches in the UK
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- Figure 31: Koto Card
- Curve Credit trialled
Advertising and Marketing Activity
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- Sharp drop in credit card advertising spend
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- Figure 32: Total above-the-line, online display and direct mail advertising expenditure on credit and charge cards, 2015/16-2019/20
- COVID-19 has had a severe impact on adspend
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- Figure 33: Total above-the-line, online display and direct mail advertising expenditure on credit and charge cards, by month, January 2016-July 2020
- Barclaycard dominates spending
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- Figure 34: Total above-the-line, online display and direct mail advertising expenditure on credit and charge cards, by advertiser, August 2019-July 2020
- Nielsen Ad Intel coverage
Brand Research
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- Brand map
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- Figure 35: Attitudes towards and usage of selected brands, June 2020
- Key brand metrics
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- Figure 36: Key metrics for selected brands, June 2020
- Brand attitudes: Barclaycard is a trusted brand with a great reputation
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- Figure 37: Attitudes, by brand, June 2020
- Brand personality: PayPal Credit and Klarna create a fun brand image
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- Figure 38: Brand personality – macro image, June 2020
- American Express is a prestigious and authoritative brand
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- Figure 39: Brand personality – micro image, June 2020
- Brand analysis
- Barclaycard is the most widely used and most trusted credit card brand
- American Express stands apart and has an exclusive and authoritative brand
- Retailer-branded credit cards reward loyalty and treat customers well
- Weaker brand proposition of the other specialists
- Alternative credit providers offer a more fun approach to lending
The Consumer – Key Takeaways
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- Shifting demographics will change the dynamics of credit cards
- Credit cards no longer simply compete with each other
- Banks can break down silos to reach new customers
- Create a community to generate word-of-mouth recommendations
Credit Cards Held
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- Credit card ownership remains stable
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- Figure 40: Credit card ownership, 2017-20
- Under-45s turn away from credit cards
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- Figure 41: Credit card ownership, by age, 2017-20
- Card ownership is rising among low-income households
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- Figure 42: Personal credit card ownership, by household income, 2018-20
- Almost half of over-65s have multiple credit cards
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- Figure 43: Number of credit cards held, by age, July 2020
How They Use Credit Cards
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- Credit cards serve a variety of roles
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- Figure 44: How they use a credit card, July 2020
- Older people are more likely to use their credit card for ecommerce
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- Figure 45: Use of credit cards to shop online, by age, July 2020
Repayment Habits
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- One in five pay the minimum or whatever they can afford
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- Figure 46: Repayment habits, July 2020
- Older users are most likely to clear the balance every month
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- Figure 47: Repayment habits, by age, July 2020
- Foreign travellers and online shoppers pay the full balance
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- Figure 48: Repayment habits, by how they use a credit card, July 2020
- M&S Bank and Amex customers prefer to pay in full
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- Figure 49: Repayment habits, by credit card provider, July 2020
Important Features of a Credit Card
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- The importance of a physical card is dissipating
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- Figure 50: Important features when choosing a credit card, July 2020
- Mobile apps are no longer a ‘nice to have’
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- Figure 51: Important features when choosing a credit card, by age, July 2020
- Fintechs have shifted expectations around speed of information
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- Figure 52: Important features when choosing a credit card, by age, July 2020
Trusted Sources of Information
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- Few trust credit card companies to recommend a credit card
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- Figure 53: Most trusted sources of information when choosing a new credit card, July 2020
- Banks are best placed to reach new customers
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- Figure 54: Trusted sources of information when choosing a credit card, by credit card ownership, July 2020
- Reaching Gen Z through word-of-mouth recommendations
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- Figure 55: Trusted sources of information when choosing a new credit card (selected options) (net any rank-selected sources), by generation, July 2020
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Consumer research methodology
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