The plastic card industry has come a long way since the introduction of debit and credit cards. On the 29 June 1966 the UK's first credit card was launched by Barclaycard. The blue, white and gold card had a signature strip on the front (instead of the back) and worked more like a charge card. The credit card market has subsequently gone through quite a revolution. In the mid-1990s the UK experienced an influx of US credit card issuers, who saw the great potential in the otherwise underdeveloped UK credit card market.

These new entrants not only rejuvenated the pricing structure of the credit card market, but they also eroded some core beliefs among consumers concerning credit cards being the sole remit of the more affluent consumer. The use of aggressive marketing strategies ensured that a wider selection of the UK populace now qualified for the once-elusive credit card. Increased competition has led to improving flexibility and a greater array of choices available to the consumer.

Debit cards, on the other hand, were introduced in 1987, specifically the Visa Delta card, once again introduced by Barclaycard, followed by the Switch card in 1988. Solo and Visa Electron cards are fully authorised debit cards. The main distinction between the debit and credit card has to do with the availability of a debit card as a by-product of a current account, giving access to ready funds. Credit cards, on the other hand, have a scoring system, which allows prospective customers to be pre-allocated with a credit limit based on a credit score.

The market for credit and debit cards has grown, with both payment cards leading the way as major payment methods preferred by consumers in the UK. The number of debit cards in issue marginally outstrips the number of credit cards. Various aspects of plastic cards will be examined in this report, including the size of the UK plastic card market, product types, providers and transaction patterns.

To get a better grasp of consumers' attitudes towards plastic cards, Mintel commissioned exclusive research from NOP in May 2003. To help establish important factors affecting ownership of credit and debit cards, research was conducted among a nationally representative sample of 1,938 adults aged 18+.

Report coverage:

This report offers you a fresh assessment of:

- Market sizes and trends

- Market Factors

- Products and Providers

- Advertising and Promotion

- Consumer attitudes

- Future trends

Market forecasts

Major findings include:

Consumer trends - Exclusive findings published in this report show that both men and women are more likely to use their credit cards more frequently if the card offered a lower rate of interest. For women a longer credit period is less of an incentive compared to men and, not surprisingly, both men and women favour discounts for loyal or high-spending consumers. All age groups except the over-65s state lower interest as the most attractive incentive to use their credit cards more frequently. The 25-34-year-olds and 45-54-year-olds are likely to use their credit cards more frequently if offered discounts for being loyal or for high spending.

Other related reports include:

- Premium and Packaged Accounts - UK, Finance Intelligence, June 2003

- Direct Banking - UK, Finance Intelligence, April 2003

- Store Cards - UK, Finance Intelligence, October 2002

- Sub-prime Lending - UK, Finance Intelligence, September 2002

- Pricing and Competition - UK, Finance Intelligence, June 2002

Definitions

A payment card is loosely defined as any card that can be used on its own to pay for goods and services. A fairly wide range of products fall into this category and, for the purposes of this report, the definitions used are as follows:

Affinity card - A payment card that is issued on the basis that the card issuer makes a donation to a particular organisation.

Charge card - A payment card, the terms of which include the obligation to settle the account in full at the end of a specified period.

Credit card - A payment card that enables the holder to make purchases up to a prearranged ceiling, or credit limit. The balance can be settled in full by the end of a specified period, in which case interest is generally not payable, or can be settled in part, with the balance taken as extended credit.

Debit card - A payment card linked to a bank or building society account, used to pay for goods or services by debiting the holder's account.