Table of Contents
Executive Summary
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- The market
- Gross credit card lending is expected to grow steadily over the next five years
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- Figure 1: Forecast of gross credit card lending (not seasonally adjusted), 2009-19
- Credit card numbers lag behind debit cards
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- Figure 2: Number of cards in issue, by card type, 2003-13
- Market factors
- Net unsecured lending more than tripled in 2013
- Consumers see an improvement in their financial situation
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- Figure 3: Trends in consumers’ current financial situation compared to a year ago, December 2011-May 2014
- Credit card debt write-offs are falling…
- … but card fraud losses on an upward trend since 2011
- Regulatory round-up
- Companies, brands and innovation
- Barclays and LBG dominant credit card providers at group level
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- Figure 4: Estimated group share of UK credit and charge card market (rebased to 100%), by share of customers, May 2014
- Adspend on credit cards increases by 18% in 2013/14
- Who’s innovating?
- The consumer
- Credit card ownership
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- Figure 5: Payment card ownership by consumers who own one or more cards, May 2014
- Consumer use of credit cards
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- Figure 6: Consumer use of credit cards, May 2014
- Consumer use of reward schemes
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- Figure 7: Consumer use of reward schemes, May 2014
- Attitudes towards reward schemes among users
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- Figure 8: Agreement with statements on credit card reward schemes, May 2014
- Influential factors for credit card ownership
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- Figure 9: Influential factors for credit card ownership, May 2014
- What we think
Issues and Insights
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- Reward schemes have the power to increase credit card spending
- The facts
- The implications
- A new approach is needed to reach today’s switched-on Millennials
- The facts
- The implications
- How can credit cards stand to compete with debit cards in the face of conflicting interests?
- The facts
- The implications
- London buses can help drive contactless card payments
- The facts
- The implications
Trend Application
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- Personalisation of credit card reward schemes
- Preparation drives the younger credit cardholders
- Mintel’s futures: Access Anything, Anywhere
Market Drivers
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- Key points
- Total net unsecured lending more than tripled in 2013
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- Figure 10: Net consumer lending (non-seasonally adjusted), 2008-13
- Consumers see an improvement in their financial situation
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- Figure 11: Trends in consumers’ current financial situation compared to a year ago, December 2011 – May 2014
- Credit card debt write-offs reach a record low
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- Figure 12: Quarterly write-offs of lending to individuals (non-seasonally adjusted), by sector, March 2008-2014
- Credit card interest rates continue to fall while base rate remains unchanged
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- Figure 13: Official bank base rate, three-month LIBOR, effective overdraft and credit card interest rates (monthly average), January 2007-June 2014
- Card fraud losses have been growing since 2011
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- Figure 14: Annual plastic fraud losses on UK-issued cards, 2008-13
- Regulatory round-up
- FCA to probe credit card market
- European Parliament votes for EU cap on interchange fees
- London buses go contactless from July 2014
- London black cabs could be forced to take card payments within two years
Competitor Products
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- Key points
- Credit card numbers lag behind debit cards
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- Figure 15: Number of cards in issue, by card type, 2003-13
- Cash payments are declining while the use of debit cards is on the rise
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- Figure 16: Total volume of payments in the UK, by payment method, 2003, 2008 and 2013
- Credit cards continue to account for the majority of gross unsecured credit lending
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- Figure 17: Gross consumer credit lending, by type, 2008-13
Who’s Innovating?
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- Key points
- Barclaycard steps into mobile point of sale market with Barclaycard Anywhere
- Barclaycard launches bPay contactless payment wristband
- Credit card wars in balance transfer offers continue…
- … while NatWest and RBS have stopped their introductory deals
- Barclaycard scraps its five cashback cards making its credit card range simpler
- Credit cards targeting the adverse credit market
Market Size and Forecast
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- Key points
- Credit card transactions in the UK increased by 5% in 2013
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- Figure 18: Volume and value of transactions for UK purchases, by card type, 2009-13
- Overseas credit card transactions increased by over 40% in 2013
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- Figure 19: Summary of credit and charge card transactions made outside the UK, 2013
- Big growth in net credit card lending
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- Figure 20: Gross and net credit card lending to individuals (non-seasonally adjusted), 2008-13
- Five-year forecast of gross credit card lending
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- Figure 21: Forecast of gross credit card lending (not seasonally adjusted), 2009-19
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- Figure 22: Forecast of gross credit card lending, 2009-19
- Forecast methodology
- Fan chart explanation
Market Share
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- Key points
- Barclaycard maintains its leading position in the credit card market
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- Figure 23: Ranking of the largest credit and charge card providers in the UK, by share of customers, May 2014
- Barclays and LBG dominant credit card providers at group level
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- Figure 24: Estimated group share of UK credit and charge card market (rebased to 100%), by share of customers, May 2014
- MasterCard and Visa dominate the credit and charge card market
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- Figure 25: Credit and charge cards in issue, by card scheme, 2003-13
Companies and Products
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- American Express
- Company description
- Product range
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- Figure 26: Summary of selected credit cards offered by American Express, UK, July 2014
- Recent financial performance
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- Figure 27: Key annual financial data for American Express, 2012 and 2013
- Recent activity
- Barclaycard
- Company description
- Product range
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- Figure 28: Summary of selected credit cards offered by Barclaycard, UK, July 2014
- Recent financial performance
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- Figure 29: Key annual financial data for Barclaycard, 2012 and 2013
- Recent activity
- HSBC Group
- Company description
- Product range
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- Figure 30: Summary of selected credit cards offered by HSBC, UK, July 2014
- Figure 31: Summary of selected credit cards offered by First Direct and M&S, UK, July 2014
- Recent financial performance
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- Figure 32: Key annual financial data for HSBC Bank Plc, Europe, 2012 and 2013
- Recent activity
- Lloyds Banking Group (LBG)
- Company description
- Product range
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- Figure 33: Summary of selected credit cards offered by Lloyds Bank, UK, July 2014
- Figure 34: Summary of selected credit cards offered by Halifax, UK, July 2014
- Figure 35: Summary of selected credit cards offered by Bank of Scotland, UK, July 2014
- Recent financial performance
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- Figure 36: Key annual financial data for Lloyds Banking Group, 2012 and 2013
- Recent activity
- MBNA Europe
- Company description
- Product range
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- Figure 37: Summary of selected credit cards offered by MBNA, UK, July 2014
- Figure 38: Credit card offered by Virgin Money (and issued by MBNA)
- Recent activity
- RBS Group
- Company description
- Product range
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- Figure 39: Summary of credit cards offered by RBS and NatWest, July 2014
- Recent financial performance
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- Figure 40: Key annual financial data for RBS Group, 2012-13
- Recent activity
Brand Research
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- Brand map
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- Figure 41: Attitudes towards and usage of brands in the credit card sector, June 2014
- Correspondence analysis
- Brand attitudes
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- Figure 42: Attitudes, by credit card brand, June 2014
- Brand personality
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- Figure 43: Credit card brand personality – macro image, June 2014
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- Figure 44: Credit card brand personality – micro image, June 2014
- Brand experience
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- Figure 45: Credit card brand usage, June 2014
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- Figure 46: Satisfaction with various credit card brands, June 2014
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- Figure 47: Consideration of credit card brands, June 2014
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- Figure 48: Consumer perceptions of current credit card brand performance, June 2014
- Brand recommendation
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- Figure 49: Recommendation of selected credit card brands, June 2014
Brand Communication and Promotion
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- Key points
- Adspend on credit cards increased by 18% in 2013/14
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- Figure 50: Advertising expenditure on payment cards, by card type, 2011/12-2013/14
- Top 10 advertisers account for over 88% of adspend in the credit and charge card market
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- Figure 51: Top 10 advertisers of credit and charge cards, 2011/12-2013/14
- Direct mail continues to dominate the credit and charge card market
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- Figure 52: Adspend on credit and charge cards, by media type, 2011/12 – 2013/14
- A note on adspend
Channels to Market
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- Key points
- 45% of credit card holders applied for their cards online
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- Figure 53: Channels used to apply for a credit card, May 2014
- Applications in bank and building society branches still popular
- More than three quarters of internet users manage their credit cards online
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- Figure 54: Agreement with the statement ‘I tend to manage my credit card(s) online’, by age, May 2014
Credit Card Ownership
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- Key points
- Survey background
- Nearly two thirds of adults have a credit card
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- Figure 55: Payment card ownership, May 2014
- Credit card ownership increases with age
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- Figure 56: Credit card ownership, by age, May 2014
- Credit cards most popular among the higher earners
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- Figure 57: Card ownership, by gross personal income, May 2014
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- Figure 58: Card ownership, by current financial situation, May 2014
Consumer Use of Credit Cards
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- Key points
- Credit cards remain more popular for expensive items rather than everyday expenditure
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- Figure 59: Consumer use of credit cards, May 2014
- Young people more mindful of their credit score…
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- Figure 60: Consumer use of credit cards, by age, May 2014
- … but also checking their credit score before a credit card application
- More than two thirds of adults pay off their credit card balance in full every month
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- Figure 61: Consumer use of credit cards, by gross personal income, May 2014
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- Figure 62: Agreement with the statement “I usually pay off my full credit card balance every month”, by housing situation, May 2014
- Balance transfers more appealing to those with three or more credit cards
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- Figure 63: Consumer use of credit cards, by number of credit cards owned
Consumer Use of Reward Schemes
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- Key points
- 13% of adults are unsure if their credit card has a rewards scheme
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- Figure 64: Consumer use of reward schemes, May 2014
- Reward schemes are clearly affecting spending behaviour…
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- Figure 65: General consumer use of credit cards, by consumer use of reward schemes, May 2014
- … and appear to be an effective retention tool
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- Figure 66: Agreement with the statement “I have transferred my outstanding balance to a lower-rate credit card in the last year”, by consumer use of reward schemes, May 2014
- Older adults are more likely to take advantage of their credit card rewards schemes
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- Figure 67: Consumer use of reward schemes, by age, May 2014
- Create greater personalisation and interaction to increase engagement
Attitudes towards Reward Schemes among Users
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- Key points
- Cashback preferred over reward schemes by 35% of scheme members
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- Figure 68: Agreement with statements on credit card reward schemes, May 2014
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- Figure 69: Agreement with the statement ‘I would prefer to earn cashback on my credit card purchases instead of reward points’, by current financial situation compared to a year ago, May 2014
- One third of credit card holders do not think it is worth paying for reward schemes
- Frequent credit card users are more engaged with their reward scheme
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- Figure 70: Consumer use of reward schemes, by agreement with the statement ‘I use my credit card(s) for everyday expenditure’, May 2014
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- Figure 71: Consumer use of reward schemes, by number of credit cards owned, May 2014
Influential Factors for Credit Card Ownership
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- Key points
- Over half of adults consider not having to pay a credit card fee as an important factor
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- Figure 72: Influential factors for credit card ownership, May 2014
- More affluent consumers consider travel benefits as important…
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- Figure 73: Influential factors for credit card ownership, by gross annual household income, May 2014
- … while consumers with limited savings are more likely to look for a low interest rate
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- Figure 74: Influential factors for credit card ownership, by value of savings, May 2014
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- Figure 75: Influential factors for credit card ownership, by current financial situation, May 2014
- ‘Soft searches’ considered important by 23% of consumers either struggling or in trouble financially
- Preference for cashback is stronger among the more engaged consumers
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- Figure 76: Influential factors for credit card ownership, by consumer use of reward schemes, May 2014
Appendix – Market Size and Forecast
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- Figure 77: Volume and value of transactions for UK purchases, by card type, 2009-13
- Figure 78: Volume and value of cash withdrawals, by card type, 2009-13
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- Figure 79: Forecast of gross credit card lending, 2009-19
- Figure 80: Forecast of gross credit card lending, best and worst-case scenario, 2014-18
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Appendix – Market Share
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- Figure 81: Market share of credit and charge card providers, by demographics, May 2014
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- Figure 82: Market share of credit and charge card providers, by demographics, May 2014 (continued)
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- Figure 83: Market share of credit and charge card providers, by demographics, May 2014 (continued)
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- Figure 84: Market share of credit and charge card providers, by demographics, May 2014 (continued)
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- Figure 85: Market share of credit and charge card providers, by demographics, May 2014 (continued)
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Appendix – Brand Research
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- Figure 86: Brand usage, June 2014
- Figure 87: Brand commitment, June 2014
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- Figure 88: Brand momentum, June 2014
- Figure 89: Brand diversity, June 2014
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- Figure 90: Brand satisfaction, June 2014
- Figure 91: Brand recommendation, June 2014
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- Figure 92: Brand attitude, June 2014
- Figure 93: Brand image – macro image, June 2014
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- Figure 94: Brand image – micro image, June 2014
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Appendix – Channels to Market
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- Figure 95: Channels used to apply for a credit card, by demographics, May 2014
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- Figure 96: Channels used to apply for a credit card, by demographics, May 2014 (continued)
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Appendix – Credit Card Ownership
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- Figure 97: Credit card ownership – Debit card, by demographics, May 2014
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- Figure 98: Credit card ownership – Credit card, by demographics, May 2014
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- Figure 99: Credit card ownership – Store card, by demographics, May 2014
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- Figure 100: Credit card ownership – Prepaid card, by demographics, May 2014
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- Figure 101: Credit card ownership – Charge card, by demographics, May 2014
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Appendix – Consumer Use of Credit Cards
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- Figure 102: Response to the statement “I use my credit card(s) to pay for large/expensive items such as holiday bookings”, by demographics, May 2014
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- Figure 103: Response to statement “I use my credit card(s) for everyday expenditures, such as groceries”, by demographics, May 2014
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- Figure 104: Response to statement “I tend to manage my credit card(s) online”, by demographics, May 2014
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- Figure 105: Response to statement “I usually pay off my full credit card balance every month”, by demographics, May 2014
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- Figure 106: Response to statement “I checked my credit score before I applied for my most recent credit card”, by demographics, May 2014
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- Figure 107: Response to statement “I have an idea of what my credit score is”, by demographics, May 2014
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- Figure 108: Response to statement “I use my credit card(s) to improve my credit rating”, by demographics, May 2014
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- Figure 109: Response to statement “I have transferred my outstanding balance to a lower-rate credit card in the last year”, by demographics, May 2014
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- Figure 110: Response to statement “I use different credit cards for different purposes”^, by demographics, May 2014
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Appendix – Consumer Use of Reward Schemes
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- Figure 111: Consumer use of credit card reward schemes, by demographics, May 2014
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Appendix – Attitudes towards Reward Schemes among Users
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- Figure 112: Agreement with statements on attitudes toward reward schemes, by attitudes towards reward schemes, May 2014
- Figure 113: Agreement with statements on credit card reward schemes, by demographics, May 2014
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- Figure 114: Agreement with statements on credit card reward schemes, by demographics, May 2014 (continued)
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Appendix – Influential Factors for Credit Card Ownership
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- Figure 115: Influential factors for credit card ownership, by demographics, May 2014
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- Figure 116: Influential factors for credit card ownership, by demographics, May 2014 (continued)
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- Figure 117: Influential factors for credit card ownership, by demographics, May 2014 (continued)
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