Table of Contents
Introduction
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- Product definitions
- Abbreviations
Executive Summary
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- The market
- Gross credit card lending continues to edge upwards
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- Figure 1: Forecast of gross credit card lending (non-seasonally adjusted), 2008-18
- Market factors
- Total net unsecured lending increased by 38% in 2012
- First half of 2013 shows strong improvements in consumer confidence
- Losses on fraudulent activity increased in 2012
- Regulatory round-up
- Companies, brands and innovation
- Barclaycard and LBG top the market share chart
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- Figure 3: Estimated group share of the UK credit and charge card market (rebased to 100), by share of customers, July 2013
- Post Office leads on trust while Amex is perceived as more exclusive and differentiated
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- Figure 4: Attitudes towards and usage of brands in the credit card sector, June 2013
- Advertising expenditure on credit cards up in 2012/13
- Who’s innovating?
- The consumer
- Credit card ownership
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- Figure 5: Payment card ownership, June 2013
- Barriers to credit card ownership
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- Figure 6: Reasons why consumers do not own credit cards, June 2013
- How consumers use credit cards
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- Figure 7: Consumer attitudes towards credit card usage, June 2013
- Contactless credit cards
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- Figure 8: Contactless credit cards, June 2013
- Credit card reward schemes
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- Figure 9: Credit card reward schemes, June 2013
- Attitudes towards reward schemes among users
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- Figure 10: Attitudes towards reward schemes among credit card users with rewards, June 2013
- Attitudes towards reward schemes among non-users
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- Figure 11: Attitudes towards reward schemes among credit card users without rewards, June 2013
- What we think
Issues in the Market
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- To what extent are contactless payments an important feature for credit card holders?
- How many credit card holders receive rewards as part of their account?
- What are the main barriers to credit card ownership?
- How do credit and charge cards stack up against debit cards?
Trend Application
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- Reward yourself with rewards points
- Using credit as debit
- Mintel futures: Generation Next
Market Drivers
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- Key points
- Total net unsecured lending up by two fifths in 2012
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- Figure 12: Net consumer credit lending (non-seasonally adjusted), 2008-12
- Demand for consumer credit continues to fluctuate
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- Figure 13: Intended consumer credit activities, Q1/Q2 2006-Q1/2 2013
- Consumer confidence brightens in the first half of 2013
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- Figure 14: UK consumer confidence, January 1988-June 2013
- Losses on card fraud increased by around 14% in 2012
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- Figure 15: Annual plastic fraud losses on UK-issued cards, 2008-12
- Credit card debt write-offs continue to fall
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- Figure 16: Quarterly write-offs of lending to individuals, by sector, March 2007-March 2013
- Credit card interest rates fall slightly but the BoE base rate remains unchanged
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- Figure 17: Official bank base rate, three-month LIBOR and effective overdraft and credit card interest rates (monthly average), January 2006-July 2013
- Debt-to-income ratio continues to fall
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- Figure 18: The value of personal sector debt (mortgages and consumer credit) and as a proportion of total PDI, at current prices, 2001-12
- Regulatory Round-up
- FCA to take responsibility for consumer credit regulation from OFT in 2014
- Crackdown on excessive card surcharges
- The EU wants to cap transaction fees
- FCA implements new rules for recurring payments
- Banks and card providers facing compensation bill of up to £1.3 billion
Competitor Products
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- Key points
- Credit card numbers still continue to lag behind debit cards
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- Figure 19: Number of cards in issue, by card type, 2002-12
- Debit cards account for almost 50% of payments in the UK
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- Figure 20: Share of payments in the UK, by volume, 2002 and 2012
- Credit cards account for over 70% of gross consumer credit lending
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- Figure 21: Gross consumer credit lending, by sector (non-seasonally adjusted), 2008-12
- Outstanding credit card debt remained relatively flat in 2012
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- Figure 22: Amount of credit card and other unsecured lending outstanding (non-seasonally adjusted), 2005-12 (at year end)
SWOT Analysis
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- Figure 23: Credit and charge card market – SWOT analysis, 2013
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Who’s Innovating?
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- Key points
- Barclaycard introduces its bespoke offers to the nation
- MBNA launches a new rewards credit card
- iZettle to allow small retailers to take credit card payments
- Helping consumers understand the cost of their credit card
- Buying gift cards and products by tweeting special hashtags
- MasterCard testing a credit card with a screen and keyboard
- Tesco Bank’s new credit card carries no fees for balance transfers
Market Size and Forecast
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- Key points
- Credit and charge card spending remained relatively flat in 2012
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- Figure 24: Volume and value of transactions for UK purchases, by card type, 2008-12
- Cash withdrawals on credit cards continue downward trend
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- Figure 25: Volume and value of cash withdrawals, by card type, 2008-12
- Overseas credit card transactions increased in 2012
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- Figure 26: Summary of credit and charge card transactions made outside the UK, 2012
- Net credit card lending declined by around 8% in 2012
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- Figure 27: Gross and net credit card lending (non-seasonally adjusted), 2007-13
- Market forecast
- Gross lending is expected to increase 30% over the next five years
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- Figure 28: Forecast of gross credit card lending (non-seasonally adjusted), 2008-18
- Figure 79: Forecast of gross credit card lending, 2008-18
- Forecast methodology
- Fan chart explanation
Market Share
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- Key points
- Barclaycard is still the number one player in the credit card market
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- Figure 30: Ranking of the largest credit and charge card providers in the UK, by share of customers, July 2013
- The top five providers account for around 60% of credit cards issued
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- Figure 31: Estimated group share of the UK credit and charge card market (rebased to 100), by share of customers, July 2013
- MasterCard and Visa dominate the credit and charge card market
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- Figure 32: Credit and charge cards in issue, by card scheme, 2012
Companies and Products
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- American Express
- Description
- Market position
- Product range
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- Figure 33: Summary of selected credit cards offered by American Express, June 2013
- Financial performance
- Recent activity
- Barclaycard
- Description
- Market position
- Product range
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- Figure 34: Summary of selected credit cards offered by Barclaycard, June 2013
- Financial performance
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- Figure 35: Key financial data for Barclaycard, 2011 and 2012
- Recent activity
- HSBC Group
- Description
- Market position
- Product range
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- Figure 36: Summary of credit cards offered by HSBC and partners, June 2013
- Financial performance
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- Figure 37: Key financial data of HSBC Bank Plc, 2011 and 2012
- Recent activity
- Lloyds Banking Group
- Description
- Market position
- Product range
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- Figure 38: Summary of credit cards offered by Lloyds TSB, June 2013
- Figure 39: Summary of credit cards offered by Halifax, June 2013
- Financial performance
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- Figure 40: Key financial data for Lloyds Banking Group‘s retail division, 2011 and 2012
- Recent activity
- MBNA Europe
- Description
- Market position
- Product range
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- Figure 41: Summary of selected credit cards offered by MBNA and partners, June 2013
- Figure 42: Summary of credit cards offered by Virgin Money (and issued by MBNA), June 2013
- Financial performance
- Recent activity
- RBS Group
- Description
- Market position
- Product range
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- Figure 43: Summary of credit cards offered by RBS and NatWest, June 2013
- Financial performance
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- Figure 44: Key financial data for RBS Group’s UK Retail Banking Division, 2011 and 2012
- Recent activity
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, June 2013
- Correspondence analysis
- Brand attitudes
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- Figure 46: Attitudes, by credit card brand, June 2013
- Brand personality
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- Figure 47: Credit card brand personality – macro image, June 2013
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- Figure 48: Credit card brand personality – micro image, June 2013
- Brand experience
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- Figure 49: Credit card brand usage, June 2013
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- Figure 50: Satisfaction with various credit card brands, June 2013
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- Figure 51: Consideration of credit card brands, June 2013
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- Figure 52: Consumer perceptions of current credit card brand performance, June 2013
- Brand index
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- Figure 53: Credit card brand index, June 2013
- Target group analysis
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- Figure 54: Target groups, June 2013
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- Figure 55: Credit card brand usage, by target groups, June 2013
- Group one – Conformists
- Group two – Simply the Best
- Group three – Shelf Stalkers
- Group four – Habitual Shoppers
- Group five – Individualists
Brand Communication and Promotion
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- Key points
- Adspend on overall cards remained relatively flat in 2012/13
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- Figure 56: Advertising expenditure on credit, affinity, charge and retail/store cards, 2010/11-2012/13
- Barclaycard leads the way when it comes to marketing activity
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- Figure 57: Top ten advertisers of credit and charge cards, 2010/11-2012/13
- Direct mail campaigns dominate the credit card market
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- Figure 58: Adspend on credit and charge cards, by media type, 2010/11-2012/13
- A note about adspend
Channels to Market
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- Key points
- Around 50% of internet users apply for credit cards online
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- Figure 59: Channels used to apply for a credit card, July 2013
- Bank/building society applications are still the most popular
Credit Card Ownership
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- Key points
- Around two thirds of adults have a credit card
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- Figure 60: Payment card ownership, June 2013
- Credit cards most popular among older customers…
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- Figure 61: Ownership of credit and charge cards, by age, June 2013
- …but younger generations are embracing charge cards
- More affluent consumers have higher ownership of credit and charge cards
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- Figure 62: Ownership of credit and charge cards, by socio-economic group and annual household income, June 2013
Barriers to Credit Card Ownership
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- Key points
- Many overlook credit cards due to fears about being in debt
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- Figure 63: Reasons why consumers do not own credit cards, June 2013
- Bad experiences and lack of self-trust are also barriers
- Around 3% of adults have been rejected while 14% think they would be refused
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- Figure 64: Agreement with the statement ‘I don’t think I would be accepted for a credit card’, by household size, June 2013
- One in ten prefer to use an overdraft instead of credit cards
How Consumers Use Credit Cards
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- Key points
- Over 50% of adults pay off their credit balance in full every month
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- Figure 65: Consumer attitudes towards credit card usage, June 2013
- Big-ticket items still more popular than everyday shopping expenditure
- Age influences the way people use credit cards
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- Figure 66: Consumer attitudes towards credit card usage, by age, June 2013
- Adults with multiple cards more likely to use them for expensive and everyday items
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- Figure 67: Consumer attitudes towards credit card usage, by payment card ownership, June 2013
- Balance transfers more appealing to those with three or more cards
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- Figure 68: Consumer agreement with the statement ‘I have transferred my outstanding balance to a lower-rate credit card in the last year’, by credit card ownership, June 2013
Contactless Credit Cards
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- Key points
- The majority of credit card holders do not have a contactless credit card
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- Figure 69: Contactless credit cards, June 2013
- Interest among those without contactless cards is low
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- Figure 70: Contactless credit cards, June 2013
- Young adults at the forefront of payment innovation
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- Figure 71: Contactless credit cards, by gender and age, June 2013
Credit Card Reward Schemes
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- Key points
- Around 60% of credit card holders have some form of rewards…
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- Figure 72: Credit card reward schemes, June 2013
- ...while over a fifth are unsure if they have a benefits scheme
- Adults who use their card for everyday purchases more likely to receive rewards
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- Figure 73: Credit card reward schemes, by consumer attitudes towards credit card usage, June 2013
- Contactless users more likely to have some form of rewards
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- Figure 74: Credit card reward schemes, by contactless credit cards, June 2013
Attitudes towards Reward Schemes Among Users
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- Key points
- A quarter of credit card holders use their card more frequently due to reward schemes
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- Figure 75: Attitudes towards reward schemes among credit card users with rewards, June 2013
- A fifth of consumers do not think it is worth paying for reward schemes
- Frequent card users are more engaged in their card reward scheme
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- Figure 76: Attitudes towards reward schemes among credit card users with rewards, by agreement with the statement ‘I use a credit card for everyday expenditures, such as groceries’, June 2013
Attitudes towards Credit Card Reward Schemes Among Non-Users
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- Key points
- More than 50% of adults with no rewards/benefits would not pay for such schemes
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- Figure 77: Attitudes towards reward schemes among credit card users without rewards, June 2013
- Some adults simply want a no-thrills credit card
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- Figure 78: Contactless credit cards, by agreement with the statement ‘I don’t see the benefit of a credit card reward scheme’, June 2013
Appendix – Market Size and Forecast
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- Figure 79: Forecast of gross credit card lending, 2008-18
- Figure 80: Gross credit card lending market forecast, best and worst-case scenario, 2013-18
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Appendix – Brand Research
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- Figure 83: Brand usage, June 2013
- Figure 84: Brand commitment, June 2013
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- Figure 85: Brand momentum, June 2013
- Figure 86: Brand diversity, June 2013
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- Figure 87: Brand satisfaction, June 2013
- Figure 88: Brand attitude, June 2013
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- Figure 89: Brand image – macro image, June 2013
- Figure 90: Brand image – micro image, June 2013
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- Figure 91: Profile of target groups, by demographics, June 2013
- Figure 92: Psychographic segmentation, by target groups, June 2013
- Figure 93: Brand usage, by target groups, June 2013
- Brand index
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- Figure 94: Brand index, June 2013
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Appendix – Credit Card Ownership
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- Figure 95: Debit card ownership, by demographics, June 2013
- Figure 96: Credit card ownership, by demographics, June 2013
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- Figure 97: Store card ownership, by demographics, June 2013
- Figure 98: Prepaid card ownership, by demographics, June 2013
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- Figure 99: Charge card ownership, by demographics, June 2013
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Appendix – Barriers to Credit Card Ownership
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- Figure 100: Main reasons why consumers do not own credit cards, by demographics, June 2013
- Figure 101: Less important reasons why consumers do not own credit cards, by demographics, June 2013
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Appendix – How Consumers Use Credit Cards
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- Figure 102: Consumer attitudes towards credit card usage, by demographics, June 2013
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- Figure 103: Consumer attitudes towards credit card usage, by demographics, June 2013 (continued)
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Appendix – Contactless Credit Cards
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- Figure 104: Contactless credit cards, by demographics, June 2013
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Appendix – Credit Card Reward Schemes
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- Figure 105: Credit card reward schemes, by demographics, June 2013
- Figure 106: Adults who do not have a credit card reward scheme or are unsure about their reward scheme, by demographics, June 2013
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- Figure 107: Contactless credit cards, by credit card reward schemes, June 2013
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Appendix – Attitudes towards Credit Card Reward Schemes Among Users
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- Figure 108: Attitudes towards reward schemes among credit card users with rewards, by demographics, June 2013
- Figure 109: Attitudes towards reward schemes among credit card users with rewards, by demographics, June 2013 (continued)
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Appendix – Attitudes towards Credit Card Reward Schemes among Non-Users
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- Figure 110: Attitudes towards reward schemes among credit card users without rewards, by demographics, June 2013
- Figure 111: Attitudes towards reward schemes among credit card users without rewards, by demographics, June 2013 (continued)
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