Table of Contents
Executive Summary
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- Top takeaways
- Consumer attitudes toward credit are positive, but new payment types are growing competitive
- COVID-19 has pushed card issuers to make rewards more innovative
- Consumers are saving, but opportunities for credit exist
- Market overview
- 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, October 2020
- Opportunities and Challenges
- Re-emergence
- Recovery
The Market – Key Takeaways
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- Three in four US adults own a credit card
- Revolving credit card debt falls for the first time since 2014
- Consumer sentiment level harkens back to ’08 recession
Market Size
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- 75% of US adults own a credit card
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- Figure 2: Financial account ownership, May 2020
- After sharp increases in 2019, open account growth in 2020 slows slightly
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- Figure 3: Number of open credit card accounts, Q4 2013 - Q4 2019 and Q1 2020
- Revolving credit card debt dips, owing to changes in spending due to COVID-19
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- Figure 4: Revolving consumer credit outstanding, 2015-2019, Q1 2020 and May 2020
- Most total credit card debt under $5,000
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- Figure 5: Total credit card debt for all cards, May 2020
- Card delinquency rates continue slow, upward climb
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- Figure 6: Quarterly credit card delinquency rates for all commercial banks, seasonally adjusted, Q1 2015 - Q1 2020
- US adults are still comfortable with holding onto credit card debt
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- Figure 7: Percentage of consumers with credit card debt, March 2015 - December 2019
- Figure 8: Percentage of consumers with credit card debt, by age, March 2015 - December 2019
Market Factors
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- Unemployment falls after pandemic surge, but recession hampers full recovery
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- Figure 9: Unemployment and underemployment, January 2008 – August 2020
- Consumer confidence echoes sentiment during ’08 recession
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- Figure 10: Consumer Sentiment Index, January 2008 – August 2020
- DPI remains higher than 2019, but was inflated from US government stimulus
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- Figure 11: Disposable Personal Income change from previous period, January 2008 – July 2020
Market Factors: Consumer Recession Beliefs and Behaviors
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- Most US adults think the US is in a recession, but time lines vary
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- Figure 12: Consumer belief that the US is entering a recession, May 2020
- Consumers would change spending habits in a recession, but may not survive financially
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- Figure 13: Consumer opinions on the US economy, May 2020
Companies and Brands – Key Takeaways
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- Marketers cut spend across the credit industry
- Issuers are adapting their rewards strategies to align with a post-COVID reality
- Emphasis on loyalty, rather than acquisition, emerges
Competitive Strategies
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- After dropping off at the beginning of the pandemic, issuers are more willing to offer credit
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- Figure 14: Credit card issuers’ direct mail marketing spend, January to August 2020
- Citi Flex Pay lets cardholders utilize a monthly payment plan
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- Figure 15: Citi Flex Pay, September 2020
- Chase Sapphire Reserve promotes grocery rewards during COVID
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- Figure 16: Chase Sapphire Reserve, grocery store rewards
- Southwest bets on future desire to travel
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- Figure 17: Southwest Rapid Rewards Plus analysis – pre- and post-COVID outbreak, August 2020
- Microlending is becoming a viable credit card alternative
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- Figure 18: Attitudes toward using buy now, pay later products, by age, September 2019
The Consumer – Key Takeaways
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- Issuers’ fight for top-of-wallet continues – most adults use one to two cards
- Adults who don’t own a credit card are debt-averse
- Contactless, card payments see moderate increase due to COVID-19
Regular Credit Card Use
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- Issuers’ fight for top-of-wallet continues – most adults use one to two cards
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- Figure 19: Number of regular credit cards in use, May 2020
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- Figure 20: Citibank Costco card email, May 2020
- Young card owners less willing to swap cards, older are open to variety
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- Figure 21: Number of regular credit cards in use, by age, May 2020
- Affluent card owners are taking advantage of their full line of cards
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- Figure 22: Number of regular credit cards in use, by household income, May 2020
Rewards Earned
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- Most card owners earn cash back
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- Figure 23: Earned rewards type, May 2020
Reasons to Not Own a Credit Card
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- Adults who don’t own a credit card are debt-averse
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- Figure 24: Reasons to not have a credit card, May 2020
- Nearly 20% of young non-card holders don’t trust issuers
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- Figure 25: Lack of trust as reason to not have a credit card, by generation, May 2020
Motivation to Apply for New Card
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- Card applicants are looking for up-front cash back
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- Figure 26: Reasons to apply for new credit card, any rank, May 2020
- Figure 27: Reasons to apply for new credit card, ranked, May 2020
- Opportunities exist in household, auto and PayPal partnerships
- Home Improvement
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- Figure 28: Comenity direct mail piece, September 2020
- Automobile Cards
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- Figure 29: BMW’s new credit cards, as of October 2020
- Partnering with PayPal
Credit Card Behaviors
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- Contactless, card payments see moderate increase due to COVID-19
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- Figure 30: Increase in card or contactless payments due to COVID-19, May 2020
- Gen Z, Millennials more deeply affected by financial struggle during COVID-19
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- Figure 31: Balance carrying or missed payments due to COVID-19, by generation, May 2020
Attitudes toward Credit Cards
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- Most card owners prefer using physical cards, but realize the future is mobile
- Younger adults, particularly men, are disinfecting their physical cards due to the pandemic
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- Figure 32: Opinions on physical credit cards, by gender and age, May 2020
- Strong preference for credit over debit remains
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- Figure 33: Preference to use credit over debit, May 2020
Appendix – Data Sources and Abbreviations
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- Data sources
- Consumer survey data
- Direct marketing creative
- Abbreviations and terms
- Abbreviations
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