Table of Contents
Executive Summary
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- The market
- Gross credit card lending keeps on rising but net lending contracts
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- Figure 1: Net consumer credit lending, by type of credit (non-seasonally adjusted), 2009-18
- Growth to continue as consumers take advantage of extra benefits
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- Figure 2: Forecast of gross credit card lending (non-seasonally adjusted) – Fan chart, 2014-24
- Balance transfer activity falls
- Regulatory focus on protecting vulnerable borrowers
- Consumer sentiment and confidence rise despite Brexit uncertainty
- Companies and brands
- Barclaycard is the largest individual provider
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- Figure 3: Largest credit and charge card providers in the UK, by share of customers, May 2019
- Flexible repayments offer consumers choice
- Providers signal that they have customers’ best interests at heart
- Rethink of benefits, rewards and loyalty among established brands
- Challengers continue to innovate and disrupt the credit card market
- Above-the-line adspend recovers driven by high-profile TV campaigns
- The consumer
- 71% of online adults have a credit card
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- Figure 4: Credit card ownership, May 2019
- Two thirds of borrowers expect to pay off balance within a year
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- Figure 5: Time expected to pay off credit card balance, May 2019
- No overwhelmingly dominant reason for owning a credit card
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- Figure 6: Reasons for owning a credit card, May 2019
- Satisfaction is high but rates and benefits may become deal breakers
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- Figure 7: Satisfaction with features of main credit card, May 2019
- People like easy-to-access benefits and cash(back) is king
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- Figure 8: Interest in credit card features, May 2019
- People trust traditional providers over tech giants and challengers
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- Figure 9: Interest in alternative credit card providers, May 2019
- What we think
Issues and Insights
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- Market focus on responsible lending and sustainable borrowing
- The facts
- The implications
- Renewed interest in credit scores
- The facts
- The implications
- Cash(back) is king
- The facts
- The implications
The Market – What You Need to Know
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- Gross credit card lending keeps on rising but net lending contracts
- Growth to continue as consumers take advantage of extra benefits
- Balance transfer activity falls
- Regulatory focus on protecting vulnerable borrowers
- Consumer sentiment and confidence rise
Market Size and Forecast
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- Gross credit card lending continues to rise
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- Figure 10: Gross and net credit card lending (non-seasonally adjusted), 2014-19
- Gross lending expected to grow steadily
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- Figure 11: Forecast of gross credit card lending (non-seasonally adjusted) – Fan chart, 2014-24
- Figure 12: Forecast of gross credit card lending, at current and constant prices, 2019-24
- Forecast methodology
Cards and Spending Patterns
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- Number of credit cards in issue remains stable
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- Figure 13: Number of debit and credit cards in issue, 2004-18
- Balance transfer activity falls
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- Figure 14: Volume and value of credit card transactions by UK residents, by type of transaction, 2014-18
- Credit cards continue to be used for lower-value transactions
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- Figure 15: Average credit card transaction value, by type of transaction, 2014-18
- 75% of credit cards are contactless
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- Figure 16: Payment cards with contactless functionality, April 2019
Payments Market
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- Credit card transactions expected to grow by 27% by 2028
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- Figure 17: Volume of payments, by type, 2018 and 2028
- Credit cards account for 8% of all payments in the UK
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- Figure 18: Share of total payment volumes, by payment type, 2018
Channels to Market
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- Price comparison sites are the main channel used for research
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- Figure 19: Credit card research channels, March 2019
- 77% apply online or in-app
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- Figure 20: Credit card purchase channels, March 2019
- Cardholders more likely to go to a provider other than their main bank
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- Figure 21: Financial products ownership, by proportion held with main current account provider, June 2018
Market Drivers
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- Gross credit card lending growing faster than other unsecured credit
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- Figure 22: Gross consumer lending, by type of credit (non-seasonally adjusted), 2009-18
- Net credit card lending has contracted for first time in five years
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- Figure 23: Net consumer credit lending, by type of credit (non-seasonally adjusted), 2009-18
- Total credit card debt outstanding grew by 3% in 2018
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- Figure 24: Amounts outstanding of credit card and other unsecured lending (non-seasonally adjusted), 2009-18
- Credit card write-offs remain stable in 2018
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- Figure 25: Annual write-offs of lending to individuals, by type of credit, 2009-18
- Credit card rates overtake overdrafts
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- Figure 26: Base interest rate, SONIA and consumer credit quoted interest rates to UK households, June 2015-June 2019
- Financial wellbeing is up in 2019
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- Figure 27: Financial wellbeing index, May 2015-May 2019
- Financial confidence rises
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- Figure 28: Index of consumer sentiment for the coming year, May 2015-May 2019
Regulatory and Legislative Changes
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- Helping people in persistent debt
- Overhaul to ‘dysfunctional’ overdraft market
- Renewed focus on vulnerable people…
- …and affordable credit
- PPI deadline looms
- NPSO rebranded Pay.UK
Companies and Brands – What You Need to Know
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- Barclaycard is the largest individual provider
- Flexible repayments offer consumers choice
- Providers signal that they have customers’ best interests at heart
- Rethink of benefits, rewards and loyalty among established brands
- Challengers continue to innovate and disrupt the credit card market
- Above-the-line adspend recovers driven by high-profile TV campaigns
Market Share
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- Barclaycard is the largest individual provider
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- Figure 29: Largest credit and charge card providers in the UK, by share of customers, May 2019
- Older consumers more likely to deal with multiple providers
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- Figure 30: Repertoire of number of credit card providers used, by age, May 2019
Competitive Strategies
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- Flexible repayments offer consumers choice
- Providers signal that they have customers’ best interests at heart
- Barclaycard launches and heavily promotes its repayment calculator
- Comparethemarket.com goes beyond meerkats to focus on product
- Providers rethinking benefits, rewards and loyalty
- HSBC launches new rewards card incentivising loyalty
- CYBG’s rebrand into Virgin Money will highlight Virgin rewards
- Amazon cuts credit card rewards on non-Amazon purchases
- Less choice for overseas benefits from established providers
- Saga withdraws its Platinum card
- Barclaycard Platinum removes free overseas usage for new customers
- Open Banking and Credit Cards
Launch Activity and Innovation
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- Apple launches a credit card in the US
- New provider Jaja acquires BoI’s UK credit card portfolio
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- Figure 31: Jaja credit card and app
- Tandem adds credit building card
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- Figure 32: Tandem Journey credit card
- Curve extends its cashback offer
- Zopa gets banking licence and looks to launch credit cards
- Innovative solutions and the blurring of credit…
- …led by a mix of foreign players, established brands and UK start-ups
- Coming soon: Zilch
Advertising and Marketing Activity
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- Credit card above-the-line adspend recovers…
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- Figure 33: Total above-the-line, online display and direct mail advertising expenditure on credit and charge cards, 2014/15-2018/19
- …driven by increased spend on TV ads…
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- Figure 34: Above-the-line advertising expenditure on credit and charge cards, by media type, 2014/15-2018/19
- …led by Barclaycard
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- Figure 35: Top 15 above-the-line, direct mail and online display advertisers of payment cards, 2016/17-2018/19
- Nielsen Ad Intel coverage
Brand Research
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- What you need to know
- Brand map
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- Figure 36: Attitudes towards and usage of selected brands in the credit card market, May 2019
- Key brand metrics
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- Figure 37: Key metrics for selected brands in the credit card market, May 2019
- Brand attitudes: Tesco Bank perceived as rewarding loyalty
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- Figure 38: Attitudes, by brand, May 2019
- Brand personality: American Express seen as exclusive
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- Figure 39: Brand personality – Macro image, May 2019
- High street banks leverage their expertise and scope
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- Figure 40: Brand personality – Micro image, May 2019
- Brand analysis
- High street banks benefit from size, recognisable brand and high usage
- American Express’ strong brand is highly differentiated
- Other specialists lose out on trust
The Consumer – What You Need to Know
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- 71% of online adults have a credit card
- Two thirds of borrowers expect to pay off credit card debt within a year
- No overwhelmingly dominant reason for owning a credit card
- Satisfaction is high but rates and benefits may become deal breakers
- People like easy-to-access benefits and cash(back) is king
- People trust traditional providers over tech giants and challengers
Credit Card Ownership
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- 71% of adults have a credit card
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- Figure 41: Credit card ownership, May 2019
- 44% of cardholders own two or more cards
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- Figure 42: Number of credit cards owned, May 2019
Credit Card Balance Status
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- 36% of cardholders have an outstanding balance
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- Figure 43: Proportion with an outstanding credit card balance, May 2019
- Two thirds of borrowers expect to pay off within a year…
- …but more than 10% expect to carry their balance for over two years
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- Figure 44: Time expected to pay off credit card balance, May 2019
- Borrowers with multiple cards are more at risk of persistent debt
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- Figure 45: Time expected to pay off credit card balance, by number of credit cards owned, May 2019
Reasons for Owning a Credit Card
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- People want credit cards to finance large purchases…
- …and to provide peace of mind…
- …including overseas
- 17% want to improve their credit score
- Looking beyond benefits
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- Figure 46: Reasons for owning a credit card, May 2019
Satisfaction with Main Credit Card
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- People are happy with basic product features
- The relationship can always improve
- Scope for a more competitive market…
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- Figure 47: Satisfaction with features of main credit card, May 2019
- …but vast majority of cardholders are ultimately satisfied with their card
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- Figure 48: Overall satisfaction with main credit card, May 2019
Satisfaction: Key Driver Analysis
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- Leveraging the positives
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- Figure 49: Key drivers of overall satisfaction with credit card used most frequently, May 2019
- Figure 50: Overall satisfaction with main credit card – key driver output, May 2019
- Building trust
- Room for improvement: overseas fees
- Rates and benefits: deal breakers?
Interest in Credit Card Features
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- People like easy-to-access benefits
- A message around privacy is likely to resonate
- Once again, overseas fees are a good differentiator
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- Figure 51: Interest in credit card features, May 2019
- Credit score building features as a rewarding extra
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- Figure 52: Interest in credit card features – CHAID – Tree output, May 2019
- TURF Analysis: cash(back) is king…
- …and can be personalised, flexible and exciting
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- Figure 53: Interest in credit card features – TURF Analysis, May 2019
Interest in Alternative Credit Card Providers
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- People trust traditional financial services providers
- 30% simply don’t know
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- Figure 54: Interest in alternative credit card providers, May 2019
- Stark differences by demographics
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- Figure 55: Appeal of alternative credit card providers, by age, May 2019
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Consumer research methodology
- Key Driver Analysis methodology
- Interpretation of results
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- Figure 56: Overall satisfaction with main credit card – key driver output, May 2019
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- Figure 57: Satisfaction with main credit card, by feature, May 2019
- CHAID analysis methodology
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- Figure 58: Interest in credit card features CHAID analysis – Table output, May 2019
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- Figure 59: Number of credit cards CHAID analysis – table output, May 2019
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- Figure 60: Credit card balance status CHAID analysis – Table output, May 2019
- TURF analysis methodology
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- Figure 61: Credit cards TURF analysis – Table output, May 2019
Appendix – Market Size and Forecast
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- Market forecast – Best- and worst-case scenarios
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- Figure 62: Forecast of gross credit card lending, at current and constant prices, 2019-24
- Forecast methodology
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