Table of Contents
Executive Summary
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- Key findings
- In a saturated market, consumers are polarized
- Simplicity is key, cash back is favored
- Indicators point to potential troubles ahead
- What it means
The Market – What You Need to Know
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- Consumers love credit
- Credit debt and delinquencies both on the rise
- Macroeconomic indicators convey healthy market for spending
Market Size
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- Number of open credit accounts has risen 20% in five years
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- Figure 1: Number of open credit card accounts, Q4 2013-Q4 2018
- More than 4 in 5 consumers have a credit card, and half have multiple
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- Figure 2: Number of credit cards used in past 3 months, May 2019
Market Factors
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- Amidst sea of other debt, credit card balances have returned to pre-recession levels…
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- Figure 3: Consumer debt balance, non-housing debt, Q1 2003-Q1 2019
- …while credit card delinquencies creep upwards
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- Figure 4: Flow into Serious Delinquency (90 days or more delinquent)†
- High consumer sentiment + low unemployment = greater spending?
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- Figure 5: Consumer confidence and unemployment, 2000-19
Key Players – What You Need to Know
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- Big players have near total market penetration
- Experiential rewards are the biggest draw
- Beware the “churner”
- Consumers need help with their cards
- New players and products add new possibilities
What’s Working
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- Top six issuers enjoy ~90% market penetration
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- Figure 6: Market share of top US credit card issuers, May 2019
- In the age of FOMO, experiential rewards are in
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- Figure 7: Value of experiences over things, April 2019
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- Figure 8: Chase Sapphire Reserve offer materials, September 2016
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- Figure 9: Capital One Savor acquisition email, November 2018
- Third-party comparison sites are a go-to destination
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- Figure 10: Nerdwallet credit card comparison homepage, August 2019
- Figure 11: Amazon credit card comparison homepage, August 2019
What’s Struggling?
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- Churners are costing the industry money
- Issuers need to help consumers take full advantage of their rewards
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- Figure 12: Attitudes toward credit cards – CHAID – Tree output, June 2019
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- Figure 13: Attitudes toward credit cards – CHAID – Table output, June 2019
- Consumers aren’t paying off balances, and their debt is causing them stress
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- Figure 14: Paying credit card balance in full, by race & ethnicity, May 2019
What’s Next?
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- Apple Card will be first big test of tech’s foray into finance
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- Figure 15: Apple Card announcement, March 2019
- Figure 16: attitudes toward large financial corporations, April 2019
- Knowing the cool kid has perks: the rise of influencer marketing
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- Figure 17: Rose gold American Express refer-a-friend, July 2019
- New ground to be tackled: Healthcare?
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- Figure 18: fitness bank homepage, August 2019
The Consumer – What You Need to Know
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- Most consumers are using either one or two cards per month
- Cash is king: parts I & II
- People aren’t terribly motivated to apply for a credit card
- Play and get played
- Rewards are the norm, and looks count
How Many Cards Are In Your Wallet?
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- Most consumers use one or two cards
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- Figure 19: Number of credit cards used in past 3 months, May 2019
- Consumers are using their cards a lot; Gen Z only exception
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- Figure 20: Credit card use in past 30 days, May 2019
- Who doesn’t have a credit card?
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- Figure 21: Consumers without a credit card, by area, race & ethnicity, and generation, May 2019
Rewards Earn and Redemption
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- Cash(back) is king
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- Figure 22: Type of credit card rewards earned, May 2019
- Multiple-card users follow predictable hierarchy: Cash > Points > Miles
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- Figure 23: Type of credit card rewards earned, by number of cards used in past 3 months, May 2019
- Cash & Points are most popular combo; store cards lure Gen Z and Millennials
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- Figure 24: Most popular rewards combinations among consumers with 2+ Credit cards, May 2019
- When redeeming, cash wins out (even among travel cardholders)
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- Figure 25: Most popular rewards redemption method, May 2019
Motivation to Apply
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- Consumers aren’t highly motivated, but cash and lack of fees are the most enticing
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- Figure 26: Motivating factors to apply for a credit card, May 2019
- Balance transfers and credit building cards have youth appeal
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- Figure 27: Motivating factors to apply for a credit card, by age, May 2019
Credit Card Behaviors
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- Young consumers more likely to game system, to be gamed by it
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- Figure 28: Credit card rewards redemption and expiry trends, by age, May 2019
- Carrying a credit card balance is quite common
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- Figure 29: Paying credit card balance in full, by race & ethnicity, May 2019
- Parents tend to game the system a bit more
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- Figure 30: General credit card behaviors, by parental status, May 2019
Attitudes toward Cards
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- Consumers are willing to pay, and looks matter
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- Figure 31: Attitudes toward physical card, and card rewards, by age, may 2019
- Touting security benefits could drive mobile wallet adoption
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- Figure 32: Attitudes toward credit card security and mobile wallet use, May 2019
Appendix – Data Sources and Abbreviations
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- Data sources
- Consumer survey data
- Direct marketing creative
- Abbreviations and terms
- Abbreviations
- CHAID Methodology
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