Table of Contents
Scope and Themes
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- What you need to know
- Data sources
- Consumer survey data
- VMS
- Abbreviations and terms
- Terms
- Companies mentioned in this report
Executive Summary
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- Industry overview
- How new industry developments may impact consumer behavior
- The consumer and rewards
- The consumer and their preferred cards
- Satisfaction with the industry
- Industry marketing strategies
- Who are the innovators?
Insights and Opportunities
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- Key points
- Credit card issuers are missing opportunities with black consumers
- To stay profitable, banks need to get consumers to borrow again
Inspire Trends
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- Trend: Prepare for the worst
- What we’ve seen
- Industry application
- Implications
Market Size and Forecast
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- Key points
- Transaction volume rises 8%, while credit card debt continues to fall
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- Figure 1: Debit and credit card volume, 2010 versus 2009
- Visa boosts its share of the market
- Credit card outstandings in steep decline
- Outstandings fall sharply among major issuers
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- Figure 2: Credit card loan outstandings at the largest banks, Q1 2011
Competitive Context
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- Key points
- Debit’s share of market continues to grow
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- Figure 3: Credit vs. debit, market shares, 2010 versus 2009
- Buying, borrowing on credit cards drops sharply in 2010
- Shift to debit has been going on for several years
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- Figure 4: Noncash payment volumes and share, 2006 and 2009
- Top nine banks control about 70% of credit card market
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- Figure 5: Market shares of top credit card issuers, Q1 2011
Segment Performance
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- Key points
- Credit card income soars as bad-debt figures show sharp recovery
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- Figure 6: Net income at largest credit card bank operations, Q1 2011
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- Figure 7: Credit card net chargeoffs at commercial banks, Q1 2011
- Figure 8: Credit card net chargeoff percentage at commercial banks, Q1 2011
- Chargeoffs remain high by historical standards
- JPMorgan Chase sees the biggest improvement
- Revenue falls 10% as receivables decline
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- Figure 9: Credit card revenue at top banks, Q1 2011
Marketing Channels
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- Key points
- 75% of credit card executives see social media as “significant factor”
- Discover offers $50 bonuses for new customer referrals
- Capital One, Amex use social media to promote travel
Market Drivers—The Regulatory Environment
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- Key points
- Debit fees or reduced rewards could shift share back to credit cards
- The Durbin Amendment and Regulation E
- Reduced debit interchange likely to mean higher fees or lower rewards
- Strong consumer resistance to debit card fees
- Several big banks reduce or eliminate debit rewards
- Banks also hit by reduced overdraft fee revenue
Leading Companies
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- Key points
- Bank of America
- JPMorgan Chase
- Citigroup
- American Express
- Discover
- HSBC
- Wells Fargo
- U.S. Bank
Innovation and Innovators
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- Key points
- Wells Fargo, Chase roll out first U.S. cards with EMV chip technology
- Capital One doles out 1 billion miles in “Match My Miles” challenge
- Are you paying with points, or should I put it on your credit card?
- PNC launches credit cards with bonus rewards for checking customers
- Citigroup tests shopping application tied to its credit cards
- First Internet Bank launches debit rewards through online banking site
- AisleBuyer Offers Card-Scanning Mobile Phone Application
- Mobile software enables CU members to “Cre8” instant personalized cards
Marketing Strategies
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- Key points
- Credit card issuers try to spur reluctant consumers to borrow again
- Cash-back rewards heavily promoted
- Representative direct and electronic mail advertising
- AARP Visa Card from Chase
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- Figure 10: AARP/Chase email ad, May 2011
- Discover Card from Discover
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- Figure 11: Discover direct mail ad, April 2011
- Chase Freedom credit card from Chase
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- Figure 12: Chase direct mail ad, April 2011
- Cash rewards Visa card from Bank of America
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- Figure 13: Bank of America Cash Reward Card direct mail ad, April 2011
- Capital One Venture Card from Capital One
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- Figure 14: Capital One Venture Card direct mail ad, April 2011
- Citi ThankYou Premier Card from Citibank
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- Figure 15: Citi ThankYou Premier Card direct mail ad, April 2011
- GM Card from HSBC
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- Figure 16: HSBC GM Card direct mail ad, April 2011
- Orchard Bank MasterCard from HSBC
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- Figure 17: Orchard Bank/HSBC MasterCard electronic mail ad, May 2011
- TrueEarnings Card from American Express
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- Figure 18: American Express TrueEarnings Card direct mail ad, April 2011
- Slate Card from Chase
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- Figure 19: Chase Slate Card with Blueprint direct mail ad, April 2011
- Ace Rewards Platinum Visa Card from U.S. Bank
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- Figure 20: U.S. Bank Ace Rewards Platinum Visa Card direct mail ad, April 2011
- Wells Fargo Home Rebate Card from Wells Fargo
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- Figure 21: Wells Fargo Home Rebate Card direct mail ad, April 2011
- Notable television advertising
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- Figure 22: Regions Bank Visa Check Card, 2011
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- Figure 23: Perkstreet.com Financial Visa Debit Card, 2010
- Figure 24: Discover, 2011
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- Figure 25: Discover, 2011
- Figure 26: Chase Marriott Rewards Premium Credit Card, 2011
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- Figure 27: Bank of America Cash Rewards Credit Card, 2011
- Figure 28: Chase Freedom Card, 2011
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- Figure 29: Capital One Venture Card, 2010
- Figure 30: American Express Premier Rewards Gold Card, 2010
The Consumer and Debit Fees
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- Key points
- Two thirds say they would switch if their bank charged a debit card fee
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- Figure 31: Attitudes about debit cards and fees, by gender, March 2011
- Scope for growth of prepaid cards among the young
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- Figure 32: Attitudes about debit cards and fees, by age, March 2011
- Banks risk alienating higher earners with debit card fees
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- Figure 33: Attitudes toward debit card fees, by income, March 2011
- Whites show greater propensity to move accounts
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- Figure 34: Attitudes toward debit card fees, by race and Hispanic origin, March 2011
Consumers and Mobile Payments
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- Key points
- Little interest in using mobile phones as payment devices
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- Figure 35: Attitudes about mobile payments, debit card holders, by gender, March 2011
- Greater acceptance among the young—but only just
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- Figure 36: Attitudes about mobile payments, debit card holders, by age, March 2011
- Highest earners are the most concerned about security
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- Figure 37: Attitudes about mobile payments, debit card holders, by income, March 2011
- Greater acceptance among Asians?
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- Figure 38: Attitudes about mobile payments, debit card holders, by race/Hispanic origin, March 2011
Rewards Programs
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- Key points
- Cash and points are most popular types of credit card reward
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- Figure 39: Types of credit card(s) owned, by gender, March 2011
- Credit usage increases with age…
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- Figure 40: Types of credit card(s) owned, by age, March 2011
- …and income
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- Figure 41: Types of credit card(s) owned, by household income, March 2011
- Half of all black respondents don’t own a credit card
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- Figure 42: Types of credit card(s) owned, by race/Hispanic origin, March 2011
- Rewards are far less common on debit cards
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- Figure 43: Types of debit card(s) owned, by gender, March 2011
- Older people relying on credit rather than debit cards
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- Figure 44: Types of debit card(s) owned, by age, March 2011
Credit Cards—Usage Frequency and Favorite Brands
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- Key points
- Most consumers use one or two credit cards a month…
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- Figure 45: Number of credit cards used in a typical month, by gender, March 2011
- …and age has little bearing on the number of cards used
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- Figure 46: Number of credit cards used in a typical month, by age, March 2011
- Highest earners mix and match their card usage
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- Figure 47: Number of credit cards used in a typical month, by household income, March 2011
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- Figure 48: Number of credit cards used in a typical month, by race and Hispanic origin, March 2011
- Urbanites are the least likely to stay loyal to one card
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- Figure 49: Number of credit cards used in a typical month, by area, March 2011
- Chase is most popular brand of credit card
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- Figure 50: Brand of primary credit card company, by gender, March 2011
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- Figure 51: Brand of primary credit card company, by age, March 2011
- Amex shows its strength among affluent consumers
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- Figure 52: Brand of primary credit card company, by income, March 2011
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- Figure 53: Brand of primary credit card company, by race and Hispanic origin, March 2011
General Attitudes about Credit Cards
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- Key points
- Most are confident about their credit score
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- Figure 54: Attitudes about credit cards, credit card holders, by gender, March 2011
- Older people far more careful with their card use
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- Figure 55: Attitudes toward credit cards, credit card holders, by age, March 2011
- Even low earners are more likely than not to clear their balance
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- Figure 56: Attitudes about credit cards, credit card holders, by household income, March 2011
- Signs of credit strain among black respondents
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- Figure 57: Attitudes toward credit cards, by race and Hispanic origin, March 2011
- The link between location and credit use
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- Figure 58: Attitudes toward credit cards, by census region, March 2011
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- Figure 59: Attitudes toward credit cards, by geographic area, March 2011
Customer Satisfaction—Credit and Debit Cards
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- Key points
- Women score higher for almost every attribute—positive and negative
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- Figure 60: Attributes describing primary credit card, by gender, March 2011
- Figure 61: Attributes used to describe primary credit card, mean of responses by gender, March 2011
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- Figure 62: Attributes used to describe primary credit card, by gender and income, March 2011
- Figure 63: Attributes used to describe primary credit card, mean of responses by gender and income, March 2011
- Are older people getting better service from their issuer?
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- Figure 64: Attributes used to describe primary credit card, by age, March 2011
- Figure 65: Attributes used to describe primary credit card, mean of responses by age, March 2011
- Evidence of dissatisfaction among black respondents
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- Figure 66: Attributes used to describe primary credit card, by race and Hispanic origin, March 2011
- Figure 67: Attributes used to describe primary credit card, mean of responses by age and Hispanic origin, March 2011
- Debit card issuers also get high marks from consumers
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- Figure 68: Attributes used to describe primary debit card, by gender, March 2011
- Figure 69: Attributes used to describe primary debit card, by gender, March 2011
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- Figure 70: Attributes used to describe primary debit card, by gender and income, March 2011
- Figure 71: Attributes used to describe primary debit card, mean of responses by gender and income, March 2011
- Older people less likely to see debit cards as an essential
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- Figure 72: Attributes used to describe primary debit card, by age, March 2011
- Figure 73: Attributes used to describe primary debit card, mean of responses by age, March 2011
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- Figure 74: Attributes used to describe primary debit card, by age, March 2011
- Asians are markedly less positive about their debit card provider
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- Figure 75: Attributes used to describe primary debit card, by race and Hispanic origin, March 2011
- Figure 76: Attributes used to describe primary debit card, mean of responses by race and Hispanic origin, March 2011
- Most customers are very or somewhat satisfied with their cards
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- Figure 77: Level of satisfaction with credit and debit card company, by gender, March 2011
- Figure 78: Level of satisfaction with credit and debit card company, mean of responses by gender, March 2011
- Seven in 10 older than 55 are “very satisfied” with their primary card
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- Figure 79: Level of satisfaction with credit and debit card company, by age, March 2011
- Figure 80: Level of satisfaction with credit and debit card company, mean of responses by age, March 2011
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- Figure 81: Level of satisfaction with credit and debit card company, by age, March 2011
- Figure 82: Level of satisfaction with credit and debit card company, mean of responses by age, March 2011
- Are higher earners expecting more from their card provider?
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- Figure 83: Level of satisfaction with credit and debit card company, by income, March 2011
- Figure 84: Level of satisfaction with credit and debit card company, mean of responses by income, March 2011
- A tale of two cards—strong contrast between debit and credit card satisfaction
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- Figure 85: Level of satisfaction with credit and debit card company, by race and Hispanic origin, March 2011
- Figure 86: Level of satisfaction with credit and debit card company, mean of responses by race and Hispanic origin, March 2011
Cluster Analysis
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- Cluster 1: Desirable and Dissatisfied
- Characteristics
- Demographics
- Opportunity
- Cluster 2: Transactors
- Characteristics
- Demographics
- Opportunity
- Cluster 3: Trusting Revolvers
- Characteristics
- Demographics
- Opportunity
- Characteristic tables
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- Figure 87: Credit and debit card clusters, March 2011
- Figure 88: Attributes describing credit cards, means for all responses, by credit and debit card clusters, March 2011
- Figure 89: Level of satisfaction with current debit and credit card, by credit and debit card clusters, March 2011
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- Figure 90: Attitudes about credit cards. by credit and debit card clusters, March 2011
- Figure 91: Attributes describing debit cards, means for all responses by credit and debit card clusters, March 2011
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- Figure 92: Attitudes concerning debit cards and mobile payments, by credit and debit card clusters, March 2011
- Figure 93: Credit and debit card clusters, by gender, March 2011
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- Figure 94: Credit and debit card clusters, by age, March 2011
- Figure 95: Credit and debit card clusters, by household income, March 2011
- Figure 96: Credit and debit card clusters, by race, March 2011
- Figure 97: Credit and debit card clusters, by Hispanic origin, March 2011
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- Figure 98: Credit and debit card clusters by smartphone ownership, March 2011
- Cluster methodology
Key Driver Analysis
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- Key drivers
- Key driver methodology
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- Figure 99: Key driver (correlation) analysis, March 2011
Appendix—Trade Associations
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