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
- Growth in gross lending is expected to slow into 2020
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- Figure 1: Forecast of gross credit card lending (non-seasonally adjusted) – Fan chart, 2012-22
- Number of credit cards in issue stalls
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- Figure 2: Number of debit, credit and charge cards in issue, 2001-16
- Higher-frequency, lower-value transactions reshape credit card use
- Companies and brands
- Lloyds Banking Group rivals Barclays for group market share
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- Figure 3: Estimated volume share of UK credit card market, by banking groups, May 2017
- Providers struggle to make their brands stand out
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- Figure 4: Attitudes towards and usage of selected brands, May 2017
- The consumer
- More than two thirds of adults have at least one credit card
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- Figure 5: Number of cards owned, May 2017
- More than a third have no outstanding credit card debt
- One in five intend to take out a new credit card in the next 12 months
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- Figure 6: New credit card intentions, May 2017
- Cashback and rewards shape credit card behaviours
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- Figure 7: Recent credit card behaviour, May 2017
- Four in five credit card holders use them as a safety net
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- Figure 8: Attitudes towards credit cards, May 2017
- Rewards and low costs are the most important features
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- Figure 9: Most important features of credit cards, May 2017
- Cashback on spending keeps people feeling rewarded
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- Figure 10: Appeal of credit card rewards, May 2017
- What we think
Issues and Insights
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- Lengthy 0% balance transfers could be set for the chop
- The facts
- The implications
- Money transfer facilities could lead the fightback against loans
- The facts
- The implications
The Market – What You Need to Know
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- Growth in gross lending is expected to slow into 2020
- Number of credit cards in issue stalls
- Higher-frequency, lower-value transactions reshape credit card use
- Credit cards fail to keep pace with ‘other consumer credit’
- FCA, PRA and Bank of England make credit concerns a priority
Market Size and Forecast
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- Growth in gross lending expected to grow by at least 5% in 2017
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- Figure 11: Gross and net credit card lending (non-seasonally adjusted), 2012-17
- Gross lending is expected to slow marginally in the next few years
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- Figure 12: Forecast of gross credit card lending (non-seasonally adjusted) – Fan chart, 2012-22
- Figure 13: Forecast of gross credit card lending, 2012-22
- Forecast methodology
Size of the Payment Card Market
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- Number of credit cards in issue stalls…
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- Figure 14: Number of debit, credit and charge cards in issue, 2001-16
- …and the proportion of credit cards in use remains just over two thirds
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- Figure 15: Level of credit card debt, May 2017
Card Spending Patterns
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- Higher-frequency, lower-value transactions reshape credit card use
- Higher interest rates and regulatory action could hinder attractiveness of cards
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- Figure 16: Volume and value of credit and debit card purchase transactions*, 2012-16
Market Drivers
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- Credit cards fail to keep pace with growth in ‘other consumer credit’
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- Figure 17: Gross consumer credit lending (excluding student loans), 2010-16
- Credit card rates have settled just below 18%
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- Figure 18: UK interest rates, January 2010-May 2017
- Improvement in financial wellbeing has been shaken by Brexit
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- Figure 19: The financial wellbeing index, January 2016-June 2017
- Credit card write-offs have started to grow again
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- Figure 20: Value of write-offs to loans to individuals (non-seasonally adjusted), 2010-16
- Fraud losses continue to grow
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- Figure 21: Annual plastic fraud losses on UK-issued cards, 2010-16
Regulatory and Legislative Changes
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- FCA publishes new rules to alleviate persistent credit card debt
- Rules aim to help people repay debts faster
- Bank of England begins crackdown on bad debt
- Open Banking and PSD2 set to shape the future of the credit card market
- CMA’s open banking remedies
- PSD2
- Surcharges for paying by credit card to be abolished
Companies and Brands – What You Need to Know
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- Lloyds Banking Group rivals Barclays for group market share
- Longer interest-free periods and money transfers shape strategies
- Credit card advertising spend returns to growth
- Providers struggle to make their brands stand out
Market Share
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- Barclaycard continues to dominate credit card ownership
- Tesco Bank is second among those with two or more cards
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- Figure 22: Credit card providers (individual brands), by single, multiple and total card ownership, May 2017
- Lloyds Banking Group rivals Barclays for group share
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- Figure 23: Estimated volume share of UK credit card market, by banking groups, May 2017
Competitive Strategies
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- Longer interest-free periods mean big business
- MBNA
- Virgin Money
- nuba
- Money transfer credit cards fight back against loans
- Virgin Money
- MBNA
- Retailer cards offer attractive benefits for frequent shoppers
- Tesco Bank
- Amazon
Advertising and Marketing Activity
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- Credit card above-the-line adspend recovers strongly
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- Figure 24: Total above-the-line, online display and direct mail advertising expenditure on plastic cards, 2014/15-2016/17*
- American Express increases adspend to rival Barclaycard
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- Figure 25: Top 10 above-the-line, online display and direct mail advertising expenditure on credit and charge cards, 2014/15-2016/17*
- Direct mail attracts growing investment
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- Figure 26: Total above-the-line, online display and direct mail advertising expenditure on credit and charge cards, by media type, 2014/15-2016/17*
- Online advertising and SEO enable ultimate targeting
- 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 2017
- Key brand metrics
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- Figure 28: Key metrics for selected brands, May 2017
- Brand attitudes: American Express stands out from the crowd
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- Figure 29: Attitudes, by brand, May 2017
- Brand personality: The Co-operative Bank is hampered by unappealing image
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- Figure 30: Brand personality – Macro image, May 2017
- Retail banks dominate key characteristics for finance brands
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- Figure 31: Brand personality – Micro image, May 2017
- Brand analysis
- Retailer-affiliated brands struggle against financial services heavyweights
- Main retail banks and building societies lean on good reputation
- MBNA and Capital One struggle to differentiate from competitors – and each other
- American Express, Barclaycard and Virgin Money stand apart from the rest of the market
- The Co-operative Bank struggles with negative perceptions
The Consumer – What You Need to Know
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- More than two thirds of adults have at least one credit card
- More than a third have no outstanding credit card debt
- Cashback and rewards shape credit card behaviours
- Four in five credit card holders use them as a safety net
- Rewards and low costs are the most important features
- Cashback on spending keeps people feeling rewarded
Credit Card Ownership
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- More than two thirds of adults have at least one credit card
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- Figure 32: Number of credit cards owned, May 2017
- Women are more likely to have no credit cards at all
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- Figure 33: Number of cards owned, by gender, May 2017
- Higher-income households are most likely to have more than one credit card
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- Figure 34: Number of cards owned, by gross annual household income, May 2017
Level of Credit Card Debt
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- More than a third have no outstanding credit card debt
- More than a third of cardholders owe more than £1,000
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- Figure 35: Level of credit card debt, May 2017
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- Figure 36: Level of credit card debt, May 2017
- One in 10 18-24s owe more than £10,000 on credit cards
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- Figure 37: Level of credit card debt, by age, May 2017
Credit Card Intentions
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- One in five intend to take out a new credit card in the next 12 months
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- Figure 38: New credit card intentions, May 2017
- Those with two cards are most likely to be seeking another
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- Figure 39: People who intend to take out a credit card in the next 12 months, by number of existing credit cards held, May 2017
- Younger people are the most open to new cards
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- Figure 40: People who intend to take out a new credit card in the next 12 months, by age, May 2017
Recent Credit Card Behaviour
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- Cashback and rewards shape credit card behaviours
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- Figure 41: Recent credit card behaviour, May 2017
- More than a quarter of cardholders have maintained status quo
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- Figure 42: Recent credit card behaviour, active versus inactive, May 2017
- Youngest age groups seek higher credit limit
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- Figure 43: Recent credit card behaviour, by age, May 2017
- Higher-income households are the most active with their credit cards
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- Figure 44: Recent credit card behaviour, by gross annual household income, May 2017
Attitudes towards Credit Cards
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- Four in five credit card holders use them as a safety net
- 57% like the convenience of holding a credit card with a main bank
- 70% say credit cards are more flexible than loans
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- Figure 45: Attitudes towards credit cards, May 2017
- Young bank customers could be tempted away by challengers
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- Figure 46: Attitudes towards credit cards, by generation, May 2017
Most Important Features of Credit Cards
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- Rewards and low costs lead the way…
- …but few look for money transfer facilities
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- Figure 47: Most important features of credit cards, May 2017
- Balance management shapes credit card activity
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- Figure 48: Most important features of credit cards, by outstanding credit card debt, May 2017
- People looking for new cards show interest in money transfer
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- Figure 49: Most important features of credit cards, by new credit card intentions, May 2017
- Generation X seek both lengthy 0% balance transfers and other rewards…
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- Figure 50: Importance of balance transfers and rewards, by generation, May 2017
- …and younger people want high credit limits and improved credit scores
Appeal of Credit Card Rewards
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- Cashback on spending keeps people feeling rewarded
- Open banking offers opportunities to deliver more personalised rewards
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- Figure 51: Appeal of credit card rewards, May 2017
- Zero-debt cardholders focus on spending rewards
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- Figure 52: Appeal of credit card rewards, May 2017
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Consumer research methodology
Appendix – Market Size and Forecast
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- Figure 53: Forecast of gross credit card lending (non-seasonally adjusted), at constant and current prices, 2017-22
- Forecast methodology
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