Table of Contents
Overview
-
- What you need to know
- Products covered in this Report
Executive Summary
-
- The market
- Gross credit card lending predicted to reach £205 billion in 2018
-
- Figure 1: Forecast of gross credit card lending (non-seasonally adjusted) – fan chart, 2013-23
- Over £70 billion owed on credit cards
- 60 million credit cards in issue
- Credit card write-offs were stable in 2017, but could rise again in 2018
- Early days of Open Banking
- FCA introduces new rules to tackle persistent debt
- Companies and brands
- LBG and Barclays are the largest credit card issuers in the UK
-
- Figure 2: Estimated group (volume) share of UK credit and charge card market, May 2018
- Other retailers and specialist card providers
- Providers rein in their generosity…
- …while investing more in product development
- Adspend falls by 30% in the year to May 2018
- The consumer
- 68% of adult internet users own a credit card
-
- Figure 3: Number of credit cards owned, May 2018
- Borrowers account for half the market
-
- Figure 4: Length of time held credit card debt, May 2018
- A third who owe money on their credit cards are concerned about how long it will take to repay it
-
- Figure 5: Concerns about credit card debt, May 2018
- 34% of cardholders get cashback on spending while 27% are rewarded for their loyalty
-
- Figure 6: Ownership of and interest in selected card benefits, May 2018
- Significant interest in mobile credit cards and account aggregation services
-
- Figure 7: Interest in mobile credit cards and smart cards/aggregator apps, May 2018
- Around a fifth of non-cardholders may get a credit card in the future
-
- Figure 8: Likelihood of getting a credit card in the future, May 2018
- What we think
Issues and Insights
-
- New rules tackling persistent debt could help 2.7 million cardholders
- The facts
- The implications
- Cardholders want greater customisation and cashback on spending
- The facts
- The implications
The Market – What You Need to Know
-
- Strong credit card lending
- Credit card balances reach £71 billion
- 60 million credit cards in issue
- New rules spawn innovation and tackle persistent debt
Market Size and Forecast
-
- Credit card lending continues to rise
-
- Figure 9: Gross and net credit card lending (non-seasonally adjusted), 2013-18
- Outlook for credit card borrowing
-
- Figure 10: Forecast of gross credit card lending (non-seasonally adjusted) – Fan chart, 2013-23
- Figure 11: Forecast of gross credit card lending, at current and constant prices, 2018-23
- Forecast methodology
Spending Patterns and the Payment Card Market
-
- 60 million credit cards in issue
-
- Figure 12: Number of debit, credit and charge cards in issue, 2004-17
- Growth of contactless
- Consumers transacted 35 billion payments in 2017…
- …of which, 8% of were made by credit card
-
- Figure 13: Share of total payment volumes, 2017
- New innovations could potentially lead to a fall in online card payments
- Credit card volumes predicted to grow by 26% over the next decade
-
- Figure 14: Volume of payments, by type, 2017 and 2027
- Increase in balance transfer activity
-
- Figure 15: Volume and value of credit card transactions by UK residents, by type of transaction, 2013-17
- Credit cards are increasingly being used for everyday purchases
-
- Figure 16: Average credit card transaction value, by type of transaction, 2013-17
Market Drivers
-
- Consumer confidence holding up against a backdrop of disappointing economic data
-
- Figure 17: Personal financial situation, 2016-18
- Credit cards account for over two thirds of gross unsecured lending
-
- Figure 18: Gross consumer credit lending, by sector (non-seasonally adjusted), 2004-17
- Consumer credit net lending has risen over the past two years
-
- Figure 19: Net consumer credit lending, by sector (non-seasonally adjusted), 2004-17
- Total credit card debt outstanding grew by 5% in 2017
-
- Figure 20: Amount of credit card and other unsecured lending outstanding (non-seasonally adjusted), 2004-17 (at year end)
- Credit card write-offs stable in 2017…
-
- Figure 21: Annual write-offs of lending to individuals, by sector, 2008-17
- …although there are signs that they could rise in 2018
- Average advertised credit card interest rate stable at 18%
-
- Figure 22: Official bank base rate, and quoted household overdraft, personal loan and credit card interest rates, June 2016-May 2018
- Cost of card fraud down 8% in 2017
-
- Figure 23: Annual fraud losses on UK-issued payment cards, 2008-17
Regulatory and Legislative Changes
-
- Surcharges for paying by credit card abolished
- The dawn of Open Banking
- FCA introduces rules to help those in persistent debt
Companies and Brands – What You Need to Know
-
- Largest card providers
- Credit card customers receiving less generous terms
- New regulation leads to increased product development
- Credit card providers cut back on above-the-line adspend
Market Share
-
- On an individual brand basis, Barclaycard leads the market by a comfy margin…
-
- Figure 24: Largest credit and charge card providers in the UK, by share of customers, May 2018
- …but on a group basis, LBG just nudges ahead
-
- Figure 25: Estimated group (volume) share of UK credit and charge card market, May 2018
Competitive Strategies and Innovation
-
- Reduced availability of introductory deals
- Cost of credit card borrowing rising
- Providers reduce cashback rates and cut back on some rewards…
- …and broaden their product ranges to target different customer needs
- Scope for more cobranded cards
- New product launches
- New entrants: Curve and Tandem
- What next for market innovation?
Advertising and Marketing Activity
-
- Credit card providers cut back on above-the-line adspend
-
- Figure 26: Total above-the-line, direct mail and online display advertising expenditure on credit cards, 2013/14-2017/18
- Social media increasingly used to support ad campaigns
- Direct mail remains the offline channel of choice for card issuers
-
- Figure 27: Above-the-line advertising expenditure on credit and charge cards, by media type, 2016-18
- Capital One invested the most in above-the-line advertising over the past year
-
- Figure 28: Top 15 above-the-line, direct mail and online display advertisers of payment cards, 2016-18
- Nielsen Ad Intel coverage
The Consumer – What You Need to Know
-
- 68% of adult internet users own a credit card
- Borrowers represent half the market
- 34% of borrowers are concerned about how long it will take them to repay their debt
- 40% of cardholders express interest in mobile credit cards
- 22% of non-cardholders may get one in the future
Credit Card Ownership
-
- 68% of adults have a credit card
-
- Figure 29: Credit card ownership, May 2018
- Multiple card ownership is commonplace
-
- Figure 30: Number of credit cards owned, May 2018
Identifying Cardholders in Persistent Debt
-
- Around half of all credit card holders are “borrowers”
-
- Figure 31: Credit card balance following last monthly payment, May 2018
- 1.4 million credit card holders have an outstanding balance of £10,000 or more
- The more credit cards people have, the more they tend to owe
-
- Figure 32: Credit card balance following last monthly payment, by number of credit cards owned, May 2018
- Age influences behaviour
- 2.7 million in long-term debt
-
- Figure 33: Length of time held credit card debt, May 2018
- 31% of cardholders who owe at least £5,000 have held their debt for more than three years
-
- Figure 34: Length of time held credit card debt, by credit card balance, May 2018
Concerns about Credit Card Debt
-
- 31% of cardholders are concerned about interest rates rising…
-
- Figure 35: Concerns about credit card debt, by credit card balance, May 2018
- …and 22% are concerned about falling into arrears
- 49% of those who’ve held credit card debt for at least three years are worried about how long it will take to clear their balance
-
- Figure 36: Concerns about credit card debt, by length of time held credit card debt, May 2018
Interest in Specific Card Benefits and New Digital Innovations
-
- 34% of credit card holders earn cashback on purchases, while a further 48% would like to
-
- Figure 37: Ownership of and interest in selected card benefits, May 2018
- 27% get rewards for loyalty, with a further 54% who’d like to join them
- 40% of cardholders would be interested in getting a mobile credit card
-
- Figure 38: Interest in new mobile credit cards and smart cards/aggregator apps, May 2018
Reasons for Not Having a Credit Card
-
- Around half of all non-credit card holders don’t feel they need one…
-
- Figure 39: Reasons for not owning a credit card, May 2018
- …but roughly one in five would consider getting one in the future
-
- Figure 40: Likelihood of getting a credit card in the future, May 2018
- One in five future prospects say they don’t have a credit card due to an impaired or limited credit history
-
- Figure 41: Reasons for not owning a credit card – by all non-cardholders and those who would consider getting one in the future, May 2018
Appendix – Data Sources and Abbreviations
-
- Abbreviations
- Consumer research methodology
Appendix – Market Size and Forecast
-
- Market forecast – best- and worst-case scenarios
-
- Figure 42: Forecast of gross credit card lending – best- and worst-case scenarios, at current prices, 2018-23
- Forecast methodology
Back to top