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Consumers and Credit Cards - US - July 2016

Published By :

Mintel

Published Date : Jul 2016

Category :

Banking

No. of Pages : N/A

Consumers can be influenced by strategic marketing messages during the credit card application process as they compare how various rewards and incentive programs meet their individual needs. Demographics play a role in which card types are most likely to meet their criteria and how marketers might alleviate any concerns about taking on new debt.

Table of Content

Overview

What you need to know
Definition

Executive Summary

The issues
Outstanding revolving consumer credit nears $1 trillion
Figure 1: Revolving consumer credit outstanding, 2011-15 and Q1 2016
Few fundamental objections to having debt
Figure 2: Reasons for not owning credit card, all, March 2016
Card security is a major concern
Figure 3: Attitudes regarding card usage, all, March 2016
The opportunities
Rewards and incentives can encourage non-users
Figure 4: Attitudes regarding offers and incentives, all, March 2016
Mobile application and platform use starts with younger men
Figure 5: Method of credit card application, gender and age, March 2016
Opportunity to cross sell credit cards to younger debit card users
Figure 6: Attitudes regarding card usage, by gender and age, March 2016
What it means

The Market – What You Need to Know

Outstanding revolving consumer credit nears $1 trillion
Number of cards issued rises as FIs heavily market new cards
Mailed consumer credit card acquisition offers top 4 billion
Most consumers have manageable debt levels
Fed interest rate hike signals future change
Ongoing economic strength bodes well for consumer confidence

Market Size

Outstanding revolving consumer credit nears $1 trillion
Figure 7: Revolving consumer credit outstanding, 2011-15 and Q1 2016

Market Perspective

Number of cards issued rises as FIs heavily market new cards
Figure 8: Number of bank cards owned and VantageScore credit score, 2011-2014
Mailed credit card acquisition offers top 4 billion
Figure 9: Direct mail consumer credit card offers, 2010-2015
Most consumers have manageable debt levels
Figure 10: Consumer debt levels, all, March 2016
Older Millennials most likely to carry high debt
Figure 11: Consumer debt levels, by generation, March 2016
Many Hispanics carrying high debt
Figure 12: Consumer debt levels, by race/Hispanic origin, March 2016

Market Factors

Fed interest rate hike signals future change
Figure 13: Effective federal funds rate, 1990-2015
Small uptick in credit card interest rates already observed
Figure 14: Interest rates of commercial bank credit card plans, 2011-15 and Q1 2016
Ongoing economic strength bodes well for consumer confidence
Figure 15: Disposable Personal Income change from previous period, January 2007-March 2016
Consumer confidence nearing pre-recession levels
Figure 16: Consumer Sentiment Index, January 2007-March 2016
Delinquency rates fall as consumers benefit from economic stability
Figure 17: Quarterly credit card delinquency rates for all commercial banks, seasonally adjusted, Q1 2011-Q1 2016
Smartphone and tablet sales rise
Figure 18: Total US unit smartphone sales, 2009-19 (forecast)
Figure 19: Total US sales of tablets, at current prices, 2010-15

Key Players – What You Need to Know

Card issuers working to reach the digital wallet
Industry-wide transition to smart payment “chip” cards brings hiccups
Card issuers may launch own digital wallets to compete with tech firms

What’s Working?

Card issuers working to reach the digital wallet
Figure 20: American Express Email, 2016
Figure 21: Bank of America Email, 2016
Figure 22: American Express Email, 2016
Figure 23: American Express Email, 2016
Figure 24: Capital One Email, 2016

What’s Struggling?

US Transition to smart payment “chip” cards comes with headaches
Figure 25: Chase statement insert, 2016
Figure 26: Capital One Email, 2016

What’s Next?

Card issuers may launch own digital pay products to compete with tech giants

The Consumer – What You Need to Know

Three quarters of consumers use plastic
Strong opportunity to encourage non-users
18-34-year-old men leading push toward mobile application
Consumers overwhelmingly satisfied with card application process
Rewards programs more attractive as household income rises
No fees, low interest, and rewards can entice consumers
Many consumers pay off balance but look to earn rewards
Security concerns reduce wide embrace of mobile

Credit Card Ownership

Three quarters of consumers use plastic
Figure 27: Credit card ownership, all, March 2016
Younger consumers using prepaid cards
Figure 28: Credit card ownership, by gender and age, March 2016
Credit card use increases with household income
Figure 29: Credit card ownership, by household income, March 2016
Blacks and Hispanics using alternatives to general credit cards
Figure 30: Credit card ownership, by race/Hispanic origin, March 2016

Reasons for Not Having Credit Card

Few steadfast objections among non-users
Figure 31: Reasons for not owning credit card, all, March 2016
Older consumers prefer cash, younger consumers concerned with security
Figure 32: Reasons for not owning credit card, by gender and age, March 2016
Indifference outweighs lack of credit among less affluent consumers
Figure 33: Reasons for not owning credit card, by household income, March 2016
One quarter of Hispanics concerned about identify theft
Figure 34: Reasons for not owning credit card, by race/Hispanic origin, March 2016

Method of Credit Card Application

Online applications most popular by far
Figure 35: Method of credit card application, all, March 2016
18-34-year-old men leading push toward mobile application
Figure 36: Method of credit card application, gender and age, March 2016
Online application process appeals to consumers of all income levels
Figure 37: Method of credit card application, gender and age, March 2016
Parents applying on mobile devices
Figure 38: Method of credit card application, by presence of children, March 2016

Attitudes Regarding Application Process

Consumers overwhelmingly satisfied with card application process
Figure 39: Attitudes regarding credit card application process, all, March 2016
Representatives guide young men to enjoy process
Figure 40: Attitudes regarding credit card application process, by gender an age, March 2016
Rewards programs more attractive as household income rises
Figure 41: Attitudes regarding credit card application process, by household income, March 2016
Hispanics more likely to apply with representative
Figure 42: Application process, by race/Hispanic origin, March 2016

Attitudes Regarding Offers and Incentives

Personalized rewards offers newest opportunity
Figure 43: Attitudes regarding offers and incentives, all, March 2016
Older consumers want loyalty, younger consumers seek choice
Figure 44: Attitudes regarding offers and incentives, by gender and age, March 2016
Black consumers may be most difficult to convert
Figure 45: Attitudes regarding offers and incentives, by race/Hispanic origin, March 2016

Attitudes Regarding Card Usage

Many consumers pay off balance, but spend big to earn big
Figure 46: Attitudes regarding card usage, all, March 2016
Opportunity to attract younger consumers with credit card bill pay
Figure 47: Attitudes regarding card usage, by gender and age, March 2016
Rewards programs attractive to more affluent consumers
Figure 48: Attitudes regarding card usage, by household income, March 2016
Black consumers far more likely to carry a balance
Figure 49: Attitudes regarding card usage, by race/Hispanic origin, March 2016

Attitudes Regarding Card Safety and Financial Sense

With security as major concern, strong customer service builds trust
Figure 50: Attitudes regarding card usage, all, March 2016
Security concerns reduce wide embrace of mobile
Figure 51: Attitudes regarding card usage, by gender, March 2016
Smartphone features appeal to those with the highest debt
Figure 52: Attitudes toward card usage, by level of household credit card debt, March 2016
Debit card users potentially trying to stay out of debt
Figure 53: Attitudes regarding card usage, by type of card user, March 2016
Debit cards prevalent among younger audience
Figure 54: Attitudes regarding card usage, by age, March 2016
Hispanics want cards on phones but concerned about safety
Figure 55: Attitudes regarding card usage, by race/Hispanic origin, March 2016

Appendix – Data Sources and Abbreviations

Data sources
Sales data
Consumer survey data
Consumer qualitative research
Direct marketing creative
Abbreviations and terms
Abbreviations

List of Table

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