What you need to know

Gross credit card lending keeps on rising, but net lending (which takes into consideration repayments) contracted in 2018 for the first time since 2012. This indicates people continue to use their cards for spending, but are hesitant about unnecessary borrowing. Amid Brexit uncertainty, Mintel expects this trend will continue over the coming years and consumers will take advantage of their credit cards to make the most of the extra benefits on offer.

Regulatory focus on vulnerable consumers is resulting in providers rethinking their image and how they can help borrowers avoid unsustainable debt by offering the right product for their needs. The threat from disruptors and alternative credit is leading to more flexibility at and after the checkout, enabled by the latest technology.

Mintel’s exclusive consumer research explores ownership of credit cards, including the number of cards held and the provider used for primary and secondary cards. It looks at the proportion of users who have an outstanding balance on their card, and how long they think it will take them to clear their debt. It assesses the reasons for owning a credit card, as well as overall satisfaction with the product and specific aspects of it, and interest in additional or innovative features that would make them choose one provider over another. Lastly, it explores the appeal of credit cards offered by alternative brands, such as tech and internet giants, compared to established financial services providers.

Products covered in this Report

For the purposes of this Report, Mintel uses the following definitions:

Credit card – a plastic payment card, which allows the cardholder to pay for goods and services on credit, up to a pre-agreed limit. It offers an added advantage over paying by debit card, in that purchases over £100 (and up to £30,000) are covered under Section 75 of the Consumer Credit Act. It can also be used for cash acquisition, although there is usually an additional fee for ATM withdrawals.

The credit facility allows the cardholder to have a revolving balance, which can be paid off over a period of time. There is typically an interest-free period of up to 56 days from the date of purchase, after which time interest will be charged on any outstanding balance. If balances are not repaid in full, the cardholder will be required to make a minimum monthly payment (usually the higher of £25 or 1% of the balance, plus any interest and fees owed).

It is common for credit cards to come with extra features and services, such as cashback on purchases and no transaction fees on overseas spending. Some are also attached to a reward or loyalty scheme – although this is more common at the premium or fee-paying end of the market.

Charge card – like a credit card except the balance must be paid off in full at the end of each billing cycle. Fees are imposed if this requirement is not met. Some charge cards do not impose a credit limit, giving the cardholder a limitless amount of credit. Most charge cards incur an annual fee, in exchange for which the cardholder can benefit from a reward scheme.

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