Table of Contents
Introduction
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- Product definitions
- Abbreviations
Executive Summary
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- The market
- Gross credit card lending is predicted to keep pace with inflation over the next few years
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- Figure 1: Forecast of gross credit card lending (at current prices) – fan chart, 2007-17
- Credit card spending
- Market factors
- Current economic environment
- Balance transfer activity
- Household debt lending
- Margins under pressure
- Rival products
- Recent regulatory developments
- Companies, brands and innovation
- Product innovation
- Largest card issuers
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- Figure 2: Estimated group share of UK credit and charge card market, May 2012
- Advertising expenditure
- Distribution trends
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- Figure 3: Channel used to apply for credit card, 2011
- The consumer
- Card ownership
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- Figure 4: Ownership of the main types of payment card, May 2012
- Amount owing on credit card
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- Figure 5: Amount owing on credit card after making last monthly payment, May 2012
- New business activity
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- Figure 6: Credit card applications, extensions, transfers and payments within the past 12 months, May 2012
- Financial health of credit card holders
- Payment behaviour and preferences
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- Figure 7: Payment preferences, by total sample and credit card holders, May 2012
- What we think
Issues in the Market
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- What is the size of the UK cardholder customer base?
- How did the market perform in 2011?
- How important are loyalty schemes to the acquisition of new customers?
- And how about bad debts?
- What is the short-term outlook for the market?
Future Opportunities
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- Making life easier for those juggling multiple debts
- Stress the positive to counter the negative
- New mobile and smartphone capability will drive evolution
Internal Market Environment
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- Key points
- Consumer credit net lending has risen over the past two years
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- Figure 8: Net consumer credit lending (not seasonally adjusted), 2007-11
- Demand for consumer credit plunges
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- Figure 9: Intended consumer credit activities, Q1/Q2 2006-Q1/Q2 2012
- Card issuers enjoy a period of improved interest margins
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- Figure 10: Official bank base rate, three-month LIBOR and effective overdraft and credit card interest rates (monthly average), January 2005-May 2012
- Update on new reforms affecting the consumer credit industry
- Credit card customers to receive annual statements in new initiative
- Cost of card fraud continues to fall
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- Figure 11: Annual plastic fraud losses on UK-issued cards, 2007-11
Broader Market Environment
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- Key points
- Tough economic backdrop lessens consumer appetite for credit
- Still no real improvement in consumer finances
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- Figure 12: Personal financial situation, April 2009-May 2012
- Consumer sentiment deeply pessimistic
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- Figure 13: UK consumer confidence, March 1988-May 2012
- Debt-to-income ratio starts to fall back
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- Figure 14: The value of personal sector debt (mortgages and consumer credit) and as a proportion of total PDI, at current prices, 2000-11
- Credit card lending accounts for roughly half of consumer debt write-offs
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- Figure 15: Quarterly write-offs of lending to individuals, by sector, March 2006-March 2012
Competitor Products
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- Key points
- Rival products
- Debit cards versus credit and charge cards
- Cards in issue
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- Figure 16: Number of debit, credit and charge cards in issue, 2001-11
- Size of the cardholder customer base
- Usage activity
- Overseas card spending
- Cash withdrawal activity
- Debit cards account for a rising share of payments
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- Figure 17: Share of payments – UK, by volume, 2000 and 2010
- Credit cards drive growth in gross consumer credit lending
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- Figure 18: Gross consumer credit lending, by sector (not seasonally adjusted), 2007-11
- The total value of credit card debt contracted by 5% in 2011
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- Figure 19: Amount of credit card and other unsecured lending outstanding (not seasonally adjusted), 2005-11 (at year end)
- Growing competition from payday loans
- Size of the payday loan market
- The target market
- Typical customer expenditure
- Leading brands in this market
Market SWOT Analysis
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- Figure 20: Credit card market – summary of strengths, weaknesses, opportunities and threats, 2012
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Who’s Innovating?
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- Key points
- Card issuers launch enticing 0% deals to attract new business
- Card loyalty schemes continue to evolve, with more targeted rewards
- The emergence of new forms of payment: contactless cards
- NFC-enabled mobile payments
- Mobile wallets
- The race is on for a unified platform
- Awareness of mobile wallets is currently fairly low, though this is to be expected
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- Figure 21: Awareness and usage of new payment technology, May 2012
- Credit cards fight back: Amex partners with Foursquare to offer location-based deals to UK cardholders
Market Size and Forecast
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- Key points
- Credit card spending grew by 6% in 2011
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- Figure 22: Volume and value of credit and charge card purchase transactions – UK, 2007-11
- Credit cards are used much less frequently for cash acquisition
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- Figure 23: Volume and value of credit and charge card cash withdrawals – UK, 2007-11
- Balance transfer activity grew for the first time in six years in 2011
- Overseas transactions fell in 2011
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- Figure 24: Summary of credit and charge card transactions made outside the UK, 2011
- Outlook for credit card spending in the UK
- Net credit card lending continues to decline
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- Figure 25: Gross and net credit card lending (non-seasonally adjusted), 2006-12
- Forecast
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- Figure 26: Forecast of gross credit card lending (non-seasonally adjusted) – fan chart, 2007-17
- Figure 27: Forecast of net credit card lending (non-seasonally adjusted) – fan chart, 2007-17
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- Figure 28: Forecast of gross and net credit card lending (non-seasonally adjusted), at constant and current prices, 2012-17
- Forecast methodology
- Fan chart explanation
Market Share
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- Key points
- Barclaycard tops credit card rankings by a clear margin…
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- Figure 29: Ranking of the largest credit and charge card providers in the UK, by share of customers, May 2012
- …but on a group basis, LBG is the largest credit card issuer in the UK
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- Figure 30: Estimated group share of UK credit and charge card market, May 2012
- Two card schemes dominate
Companies and Products
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- Lloyds Banking Group
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- Figure 31: Summary of credit cards offered by Lloyds TSB, June 2012
- Figure 32: Summary of credit cards offered by Halifax, June 2012
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- Figure 33: Key financial data for Lloyds Banking Group‘s retail division, 2010 and 2011
- Barclaycard
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- Figure 34: Summary of selected credit cards offered by Barclaycard, June 2012
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- Figure 35: Key financial data for Barclaycard, 2010 and 2011
- HSBC Group
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- Figure 36: Summary of credit cards offered by HSBC and partners, June 2012
- Figure 37: Key financial data of HSBC Bank Plc, 2010 and 2011
- MBNA Europe
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- Figure 38: Summary of selected credit cards offered by MBNA and partners, June 2012
- Figure 39: Summary of credit cards offered by Virgin Money (and issued by MBNA), June 2012
- RBS Group
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- Figure 40: Summary of credit cards offered by RBS and NatWest, June 2012
- Figure 41: Key financial data for RBS Group’s UK Retail Banking Division, 2010 and 2011
Brand Communication and Promotion
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- Key points
- The subprime crisis led to sharp drop in industry adspend
- 2011 saw only a modest increase in credit card adspend
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- Figure 42: Advertising expenditure on credit and charge cards, by product type, 2009-11
- Direct mail accounted for over half of the adspend in 2011
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- Figure 43: Advertising expenditure on credit and charge cards, by media type, 2009-11
- Barclaycard overtakes Amex to become the highest-spending advertiser
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- Figure 44: Top ten advertisers of credit and charge cards, 2009-11
- A note on NMR data
Brand Research
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- Brand map
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- Figure 45: Attitudes towards and usage of brands in the credit card sector, March 2012
- Correspondence analysis
- Brand attitudes
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- Figure 46: Attitudes, by brands active in the credit card market, March 2012
- Brand personality
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- Figure 47: Credit card brand personality – macro image, March 2012
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- Figure 48: Credit card brand personality – micro image, March 2012
- Brand experience
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- Figure 49: Usage of brands active in the credit card market, March 2012
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- Figure 50: Satisfaction with various brands active in the credit card market, March 2012
- Figure 51: Consideration of brands active in the credit card market, March 2012
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- Figure 52: Perceptions of current brand performance for brands active in the credit card market, March 2012
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- Figure 53: Brand recommendation for brands active in the credit card market– Net Promoter Score, March 2012
- Brand index
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- Figure 54: Brand index for brands active in the credit card market, March 2012
- Figure 55: Credit card brand index vs. recommendation, March 2012
- Target group analysis
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- Figure 56: Target groups, March 2012
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- Figure 57: Credit card brand usage, by target groups, March 2012
- Group One – Conformists
- Group Two – Simply the Best
- Group Three – Shelf Stalkers
- Group Four – Habitual Shoppers
- Group Five – Individualists
Channels to Market
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- Key points
- An increasing proportion of credit card applications are being made online
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- Figure 58: Channel used to apply for credit card, 2008-11
Ownership of Credit and Other Payment Cards
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- Key points
- Survey background
- Two thirds of adult internet users in Britain have a credit card
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- Figure 59: Number of payment cards owned, by card type, May 2012
Impact of Economic Environment on Finances
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- Key points
- A small minority of credit card holders are struggling or in financial trouble
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- Figure 60: Current financial situation, by total sample and credit card holders, May 2012
- More than two fifths say they are worse off now than a year ago
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- Figure 61: Financial situation compared to a year ago, by total sample and credit card holders, May 2012
- A quarter are confident about their financial position over the next year
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- Figure 62: Financial prospects over the coming year, by total sample and credit card holders, May 2012
- A quarter of card holders are spending money more carefully
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- Figure 63: Impact of economic downturn on managing money and approach to debt, by total sample and credit card holders, May 2012
Level of Credit Card Debt
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- Key points
- The more credit cards people have, the greater their debt
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- Figure 64: Amount owing on credit card after making last monthly payment, by number of credit cards owned, May 2012
- Two fifths of cardholders have concerns about their overall debts
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- Figure 65: Attitudes towards level of debt, by credit card holders with an outstanding balance, May 2012
- Less than a quarter think credit card issuers are ‘responsible’ lenders
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- Figure 66: Perception of how responsible credit card issuers are towards lending, May 2012
Recent Card Activity
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- Key points
- A quarter of new card applications were rejected in the year to May 2012
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- Figure 67: Credit card applications, extensions, transfers and payments within the past 12 months, by number of credit cards held, May 2012
- Payment defaults affect over one in ten cardholders owing £1,000+
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- Figure 68: Credit card applications, extensions, transfers and payments within the past 12 months, by credit card balance after last payment, May 2012
Card Issuer
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- Key points
- Card issuer rankings are different among those with multiple cards
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- Figure 69: Company issuing credit or charge card, by number of cards held, May 2012
- Outstanding card balances vary between providers
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- Figure 70: Amount owing on credit card after making last monthly payment, by top 12 card issuers, May 2012
- Balance transfer activity is higher among Barclaycard holders
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- Figure 71: Credit card applications, extensions, transfers and payments within the past 12 months, by top 12 card issuers, May 2012
Payment Preferences
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- Key points
- Most card users still like to carry some cash on them at all times
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- Figure 72: Attitudes toward different payment methods, by type of payment card held, May 2012
- Scope to increase aware of the added protection offered by credit cards
Credit Card Usage and Factors Affecting Choice
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- Key points
- A third of credit card holders use their card at least once a week
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- Figure 73: Frequency of credit card usage, 2011
- Almost a third use their credit card to pay for non-grocery items
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- Figure 74: Types of goods and services paid for by credit card in the past 12 months, 2011
- One in five credit card holders have monthly spend of more than £500
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- Figure 75: Average amount spent on credit card per month, 2011
- Most customers pay off their balance in full each month
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- Figure 76: Outstanding balance settlement for each month, 2011
- No annual fee and the interest rate are the most important factors
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- Figure 77: The most important factor influencing choice of credit card, 2011
Appendix – Market Forecast
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- Figure 78: Best and worst case scenario forecast of gross credit card lending (non-seasonally adjusted) – fan chart, 2012-17
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Appendix – Brand Research
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- Figure 79: Brand usage, March 2012
- Figure 80: Brand commitment, March 2012
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- Figure 81: Brand momentum, March 2012
- Figure 82: Brand diversity, March 2012
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- Figure 83: Brand satisfaction, March 2012
- Figure 84: Brand recommendation, March 2012
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- Figure 85: Brand attitude, March 2012
- Figure 86: Brand image – macro image, March 2012
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- Figure 87: Brand image – micro image, March 2012
- Figure 88: Demographic profile of target groups, March 2012
- Figure 89: Psychographic segmentation, by target groups, March 2012
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- Figure 90: Brand usage, by target group, March 2012
- Brand index
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- Figure 91: Brand index, March 2012
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Appendix – Ownership of Credit and Other Payment Cards
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- Plastic card ownership
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- Figure 92: Types of payment card owned, by demographics, May 2012
- Number of credit cards held
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- Figure 93: Number of credit cards held, by demographics, May 2012
- Profile of credit card holders
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- Figure 94: Demographic profile of credit and charge card holders versus total sample, May 2012
Appendix – Level of Credit Card Debt
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- Figure 95: Total amount owing on credit card(s) after making last monthly payment, by demographics, May 2012
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Appendix – Credit Card Issuers
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- Customer profile
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- Figure 96: Demographic profile of the top six card issuers versus all credit card holders, May 2012
- Figure 97: Demographic profile of the next six card issuers versus all credit card holders, May 2012
Appendix – Recent Card Activity
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- Figure 98: Card application, extension and transfer activity within the past 12 months, by demographics, May 2012
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Appendix – Payment Preferences
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- Figure 99: Attitudes toward different payment methods, by demographics, May 2012
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