Table of Contents
Overview
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- What you need to know
- Products covered in this Report
Executive Summary
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- The market
- Market growth expected to slow in 2016
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- Figure 1: Forecast of gross credit card lending (non-seasonally adjusted) – Fan chart, 2011-21
- Number of credit cards in issue grows by 4%
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- Figure 2: Number of debit, credit and charge cards in issue, 2001-15
- Volume of credit card transactions up by 12%
- Companies and brands
- Barclaycard dominates credit card market…
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- Figure 3: Estimated volume share of UK credit and charge card market, May 2015
- Disparity among credit card providers
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- Figure 4: Attitudes towards and usage of selected brands, May 2016
- The consumer
- Nearly two thirds of adults own a credit card
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- Figure 5: Ownership of credit and other payment cards, May 2016
- Nearly half have no outstanding balance on their credit cards
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- Figure 6: Level of credit card debt, May 2016
- Majority are unlikely to switch
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- Figure 7: Likelihood to switch credit card provider, May 2016
- No fees are important when choosing a provider
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- Figure 8: Most important features when choosing a credit card, May 2016
- Credit card market lacks loyalty
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- Figure 9: Credit card user future behaviour, May 2016
- What we think
Issues and Insights
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- Doing more to help ‘minimum repayers’ avoid difficulties
- The facts
- The implications
- Virtual cards will change credit-spending habits
- The facts
- The implications
- Credit card market sees low levels of switching
- The facts
- The implications
The Market – What You Need to Know
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- Growth expected to slow in 2016
- Market to reach £241 billion by 2021
- Number of credit cards in issue grows by 4%
- ‘Other consumer credit’ growth outstripping credit cards
- Credit card competition working well according to market study
Market Size and Forecast
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- Market growth expected to slow in 2016
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- Figure 10: Gross and net credit card lending (non-seasonally adjusted), 2011-16
- Credit card market expected to reach £241 billion by 2021
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- Figure 11: Forecast of gross credit card lending (non-seasonally adjusted) – Fan chart, 2011-21
- Figure 12: Forecast of gross credit card lending, 2011-21
- Forecast methodology
Size of the Payment Card Market
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- Number of credit cards in issue grows by 4%
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- Figure 13: Number of debit, credit and charge cards in issue, 2001-15
- Share of cash payments falls dramatically
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- Figure 14: Share of consumer payment volumes, 2015
Card Spending Patterns
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- Volume of credit card transactions up by 12%
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- Figure 15: Volume and value of credit and debit card purchase transactions, 2011-15`
- Average purchase value falls by 5%
Market Drivers
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- ‘Other consumer credit’ growth outstripping credit cards
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- Figure 16: Gross consumer credit lending (excluding student loans), 2009-15
- Credit card rates remain steady
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- Figure 17: UK interest rates, January 2009-May 2016
- Decline in write-offs for credit cards stalls
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- Figure 18: Value of write-offs to loans to individuals, 2010-15 (not seasonally adjusted)
- Financial well-being falters following Brexit vote
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- Figure 19: The financial well-being index, January 2009-July 2016
- Value of fraud losses continues to rise
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- Figure 20: Annual plastic fraud losses on UK-issued cards, 2008-15
Regulatory and Legislative Changes
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- Interchange fees ruling has little impact on cost of borrowing
- Credit card competition working well according to FCA market study
- Consumer Credit Act Review
Companies and Brands – What You Need to Know
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- Barclaycard dominates credit card market
- Interest-free periods get longer…
- Credit card adspend falls by 12%
- Wide disparity in consumer trust of brands
Market Share
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- Barclaycard dominates the credit card market…
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- Figure 21: Credit card market share, by proportion of consumers who have cards with selected brands, May 2016
- …but the combined force of LBG means it shares the top spot
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- Figure 22: Estimated volume share of UK credit and charge card market, May 2016
Competitive Strategies
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- Cashback and reward schemes continue to attract customers…
- Retailers and supermarket banks
- Over-50s reward cards
- ‘Incumbent challengers’
- …but changes to interchange rules leads to a re-think on rewards
- Interest-free periods get longer…
- Virgin Money
- Subprime credit card market sees growth
- Credit card providers embrace contactless payment technology
- Plastic cards will be replaced by contactless
- Barclays
- MasterCard
- MBNA launches loan-alternative credit card
- Paid-for current accounts pose a threat to reward-based cards
Advertising and Marketing Activity
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- Credit card spend falls by 12%
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- Figure 23: Total above-the-line, online display and direct mail advertising expenditure on plastic cards, 2013/14-2015/16
- Direct mail continues to attract the highest amount of spend
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- Figure 24: Total above-the-line, online display and direct mail advertising expenditure on credit and charge cards, by media type, 2013/14-2015/16
- Barclaycard accounts for over a third of all spend
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- Figure 25: Total above-the-line, online display and direct mail advertising expenditure on credit and charge cards, by advertiser, 2013/14-2015/16
- Credit card providers embrace digital channels
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- Figure 26: Number of twitter followers, by credit card provider, July 2016
- Nielsen Ad Intel coverage
Brand Research
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- What you need to know
- Brand map
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- Figure 27: Attitudes towards and usage of selected brands, May 2016
- Key brand metrics
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- Figure 28: Key metrics for selected brands, May 2016
- Brand attitudes: Sainsbury’s Bank best at rewarding loyalty
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- Figure 29: Attitudes, by brand, May 2016
- Brand personality: American Express differentiated by its exclusivity
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- Figure 30: Brand personality – Macro image, May 2016
- Monoliners need to improve their brand image
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- Figure 31: Brand personality – Micro image, May 2016
- Brand analysis
- High-street banks benefit from having strong brands with high consumer trust
- American Express stands apart from all other brands
- Other credit card specialists struggle to differentiate their brand image
- Supermarket banks best at using credit cards to reward loyalty
The Consumer – What You Need to Know
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- Nearly two thirds of adults own a credit card
- Nearly half have no outstanding balance of their credit card
- Majority are unlikely to switch
- No fees are important when choosing a provider
Payment Card Ownership
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- Nearly two thirds of adults own a credit card
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- Figure 32: Ownership of credit and other payment cards, May 2016
- Increase in credit card ownership
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- Figure 33: Trend in credit card ownership, 2012-16
- Card ownership highest among 65+-year-olds
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- Figure 34: Credit card ownership, by age, May 2016
Level of Credit Card Debt
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- Nearly half have no outstanding balance
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- Figure 35: Level of credit card debt, May 2016
- Credit card balances vary across age groups
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- Figure 36: Level of credit card debt, by age, May 2016
Likelihood to Switch Providers
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- Majority are unlikely to switch
- Efforts to improve communication at the end of promotional period
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- Figure 37: Likelihood to switch credit card provider, May 2016
- Younger age groups more likely to switch
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- Figure 38: Likelihood to switch credit card provider, by age, May 2016
- People with higher credit card debt are more likely to switch
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- Figure 39: Likelihood to switch credit card provider, by level of credit card debt, May 2016
Most Important Features when Choosing a Credit Card
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- No fees are important when choosing a provider
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- Figure 40: Most important features when choosing a credit card, May 2016
- A third want interest-free periods
- Low minimum repayments can lead to persistent levels of debt
- Better-off consumers can afford to look beyond interest rates
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- Figure 41: Most important features when choosing a credit card, by financial situation, May 2016
- Switchers looking for interest-free periods
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- Figure 42: Most important features when choosing a credit card, by likelihood to switch, May 2016
- People want multiple features
Recent and Future Credit Card Behaviour
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- Credit card market lacks loyalty
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- Figure 43: Credit card user future behaviour, May 2016
- Over half clear their balance every month…
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- Figure 44: Credit card user behaviour, May 2016
- … but those with outstanding balances more likely to switch
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- Figure 45: Credit card user behaviour, by likelihood to switch, May 2016
- Quarter of 18-24s use other credit products before a credit card…
- …but they’re most likely to increase their spending over the next 12 months
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- Figure 46: Credit card user behaviour, by age, May 2016
Attitudes towards Credit Cards
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- More than a third happy to use credit card for day-to-day expenses
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- Figure 47: Attitudes towards credit cards, May 2016
- Interest rate is most important for those with higher levels of debt
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- Figure 48: Attitudes towards credit cards, by level of credit card debt, May 2016
Attitudes towards Virtual Credit
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- Need for plastic cards declining
- Over a third would be interested in using virtual credit
- Millennials confident in the role of global tech companies in financial services
- But there are potential long-term impacts of moving credit online
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- Figure 49: Attitudes towards virtual credit cards, May 2016
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Consumer research methodology
Appendix – Market Size and Forecast
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- Forecast of gross credit card lending
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- Figure 50: Forecast of gross credit card lending (non-seasonally adjusted), at constant and current prices, 2016-21
- Forecast methodology
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