Table of Contents
Executive Summary
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- The issues
- Outstanding revolving consumer credit nears $1 trillion
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- Figure 1: Revolving consumer credit outstanding, 2011-15 and Q1 2016
- Few fundamental objections to having debt
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- Figure 2: Reasons for not owning credit card, all, March 2016
- Card security is a major concern
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- Figure 3: Attitudes regarding card usage, all, March 2016
- The opportunities
- Rewards and incentives can encourage non-users
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- Figure 4: Attitudes regarding offers and incentives, all, March 2016
- Mobile application and platform use starts with younger men
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- Figure 5: Method of credit card application, gender and age, March 2016
- Opportunity to cross sell credit cards to younger debit card users
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- Figure 6: Attitudes regarding card usage, by gender and age, March 2016
- What it means
The Market – What You Need to Know
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- Outstanding revolving consumer credit nears $1 trillion
- Number of cards issued rises as FIs heavily market new cards
- Mailed consumer credit card acquisition offers top 4 billion
- Most consumers have manageable debt levels
- Fed interest rate hike signals future change
- Ongoing economic strength bodes well for consumer confidence
Market Size
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- Outstanding revolving consumer credit nears $1 trillion
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- Figure 7: Revolving consumer credit outstanding, 2011-15 and Q1 2016
Market Perspective
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- Number of cards issued rises as FIs heavily market new cards
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- Figure 8: Number of bank cards owned and VantageScore credit score, 2011-2014
- Mailed credit card acquisition offers top 4 billion
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- Figure 9: Direct mail consumer credit card offers, 2010-2015
- Most consumers have manageable debt levels
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- Figure 10: Consumer debt levels, all, March 2016
- Older Millennials most likely to carry high debt
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- Figure 11: Consumer debt levels, by generation, March 2016
- Many Hispanics carrying high debt
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- Figure 12: Consumer debt levels, by race/Hispanic origin, March 2016
Market Factors
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- Fed interest rate hike signals future change
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- Figure 13: Effective federal funds rate, 1990-2015
- Small uptick in credit card interest rates already observed
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- Figure 14: Interest rates of commercial bank credit card plans, 2011-15 and Q1 2016
- Ongoing economic strength bodes well for consumer confidence
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- Figure 15: Disposable Personal Income change from previous period, January 2007-March 2016
- Consumer confidence nearing pre-recession levels
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- Figure 16: Consumer Sentiment Index, January 2007-March 2016
- Delinquency rates fall as consumers benefit from economic stability
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- Figure 17: Quarterly credit card delinquency rates for all commercial banks, seasonally adjusted, Q1 2011-Q1 2016
- Smartphone and tablet sales rise
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- Figure 18: Total US unit smartphone sales, 2009-19 (forecast)
- Figure 19: Total US sales of tablets, at current prices, 2010-15
Key Players – What You Need to Know
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- Card issuers working to reach the digital wallet
- Industry-wide transition to smart payment “chip” cards brings hiccups
- Card issuers may launch own digital wallets to compete with tech firms
What’s Working?
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- Card issuers working to reach the digital wallet
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- Figure 20: American Express Email, 2016
- Figure 21: Bank of America Email, 2016
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- Figure 22: American Express Email, 2016
- Figure 23: American Express Email, 2016
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- Figure 24: Capital One Email, 2016
What’s Struggling?
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- US Transition to smart payment “chip” cards comes with headaches
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- Figure 25: Chase statement insert, 2016
- Figure 26: Capital One Email, 2016
What’s Next?
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- Card issuers may launch own digital pay products to compete with tech giants
The Consumer – What You Need to Know
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- Three quarters of consumers use plastic
- Strong opportunity to encourage non-users
- 18-34-year-old men leading push toward mobile application
- Consumers overwhelmingly satisfied with card application process
- Rewards programs more attractive as household income rises
- No fees, low interest, and rewards can entice consumers
- Many consumers pay off balance but look to earn rewards
- Security concerns reduce wide embrace of mobile
Credit Card Ownership
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- Three quarters of consumers use plastic
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- Figure 27: Credit card ownership, all, March 2016
- Younger consumers using prepaid cards
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- Figure 28: Credit card ownership, by gender and age, March 2016
- Credit card use increases with household income
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- Figure 29: Credit card ownership, by household income, March 2016
- Blacks and Hispanics using alternatives to general credit cards
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- Figure 30: Credit card ownership, by race/Hispanic origin, March 2016
Reasons for Not Having Credit Card
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- Few steadfast objections among non-users
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- Figure 31: Reasons for not owning credit card, all, March 2016
- Older consumers prefer cash, younger consumers concerned with security
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- Figure 32: Reasons for not owning credit card, by gender and age, March 2016
- Indifference outweighs lack of credit among less affluent consumers
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- Figure 33: Reasons for not owning credit card, by household income, March 2016
- One quarter of Hispanics concerned about identify theft
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- Figure 34: Reasons for not owning credit card, by race/Hispanic origin, March 2016
Method of Credit Card Application
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- Online applications most popular by far
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- Figure 35: Method of credit card application, all, March 2016
- 18-34-year-old men leading push toward mobile application
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- Figure 36: Method of credit card application, gender and age, March 2016
- Online application process appeals to consumers of all income levels
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- Figure 37: Method of credit card application, gender and age, March 2016
- Parents applying on mobile devices
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- Figure 38: Method of credit card application, by presence of children, March 2016
Attitudes Regarding Application Process
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- Consumers overwhelmingly satisfied with card application process
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- Figure 39: Attitudes regarding credit card application process, all, March 2016
- Representatives guide young men to enjoy process
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- Figure 40: Attitudes regarding credit card application process, by gender an age, March 2016
- Rewards programs more attractive as household income rises
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- Figure 41: Attitudes regarding credit card application process, by household income, March 2016
- Hispanics more likely to apply with representative
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- Figure 42: Application process, by race/Hispanic origin, March 2016
Attitudes Regarding Offers and Incentives
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- Personalized rewards offers newest opportunity
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- Figure 43: Attitudes regarding offers and incentives, all, March 2016
- Older consumers want loyalty, younger consumers seek choice
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- Figure 44: Attitudes regarding offers and incentives, by gender and age, March 2016
- Black consumers may be most difficult to convert
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- Figure 45: Attitudes regarding offers and incentives, by race/Hispanic origin, March 2016
Attitudes Regarding Card Usage
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- Many consumers pay off balance, but spend big to earn big
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- Figure 46: Attitudes regarding card usage, all, March 2016
- Opportunity to attract younger consumers with credit card bill pay
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- Figure 47: Attitudes regarding card usage, by gender and age, March 2016
- Rewards programs attractive to more affluent consumers
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- Figure 48: Attitudes regarding card usage, by household income, March 2016
- Black consumers far more likely to carry a balance
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- Figure 49: Attitudes regarding card usage, by race/Hispanic origin, March 2016
Attitudes Regarding Card Safety and Financial Sense
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- With security as major concern, strong customer service builds trust
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- Figure 50: Attitudes regarding card usage, all, March 2016
- Security concerns reduce wide embrace of mobile
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- Figure 51: Attitudes regarding card usage, by gender, March 2016
- Smartphone features appeal to those with the highest debt
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- Figure 52: Attitudes toward card usage, by level of household credit card debt, March 2016
- Debit card users potentially trying to stay out of debt
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- Figure 53: Attitudes regarding card usage, by type of card user, March 2016
- Debit cards prevalent among younger audience
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- Figure 54: Attitudes regarding card usage, by age, March 2016
- Hispanics want cards on phones but concerned about safety
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- Figure 55: Attitudes regarding card usage, by race/Hispanic origin, March 2016
Appendix – Data Sources and Abbreviations
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- Data sources
- Sales data
- Consumer survey data
- Consumer qualitative research
- Direct marketing creative
- Abbreviations and terms
- Abbreviations
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