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CREDIT CARD REWARDS - US - AUGUST 2019

Published By :

Mintel

Published Date : Aug 2019

Category :

Cards & Payments

No. of Pages : N/A

The credit card industry is a well-established one, and a handful of top players dominate the industry – in terms of both market share and assets. The majority of consumers already own a credit card, and most who use them frequently own several. As a result, competition for new customers is fierce and is driven in large part by new young consumers. Rewards provide both the allure and differentiation in a consumer’s choice of card, but issuers must also combat a lack of motivation to apply as well as a reticence to take on more debt.

Table of contents

OVERVIEW
What you need to know
Definition
EXECUTIVE SUMMARY
Key findings
In a saturated market, consumers are polarized
Simplicity is key, cashback is favoured
Indicators point to potential troubles ahead
What it means
THE MARKET – WHAT YOU NEED TO KNOW
Consumers love credit
Credit debt and delinquencies both on the rise
Macroeconomic indicators convey a healthy market for spending
MARKET SIZE
Number of open credit accounts has risen 20% in five years
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
Figure 2: Number of credit cards used in past 3 months, May 2019
MARKET FACTORS
Amidst sea of other debt, credit card balances have returned to pre-recession levels…
Figure 3: Consumer debt balance, non-housing debt, Q1 2003-Q1 2019
…while credit card delinquencies creep upwards
Figure 4: Flow into Serious Delinquency (90 days or more delinquent)†
High consumer sentiment + low unemployment = greater spending?
Figure 5: Consumer confidence and unemployment, 2000-19
KEY PLAYERS – WHAT YOU NEED TO KNOW
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
Top six issuers enjoy ~90% market penetration
Figure 6: Market share of top US credit card issuers, May 2019
In the age of FOMO, experiential rewards are in
Figure 7: Value of experiences over things, April 2019
Figure 8: Chase Sapphire Reserve offer materials, September 2016
Figure 9: Capital One Savor acquisition email, November 2018
Third-party comparison sites are a go-to destination
Figure 10: Nerdwallet credit card comparison homepage, August 2019
Figure 11: Amazon credit card comparison homepage, August 2019
WHAT’S STRUGGLING?
Churners are costing the industry money
Issuers need to help consumers take full advantage of their rewards
Figure 12: Attitudes toward credit cards – CHAID – Tree output, June 2019
Figure 13: Attitudes toward credit cards – CHAID – Table output, June 2019
Consumers aren’t paying off balances, and their debt is causing them stress
Figure 14: Paying credit card balance in full, by race & ethnicity, May 2019
WHAT’S NEXT?
Apple Card will be the first big test of tech’s foray into finance
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
Figure 17: Rose gold American Express refer-a-friend, July 2019
New ground to be tackled: Healthcare?
Figure 18: fitness bank homepage, August 2019
THE CONSUMER – WHAT YOU NEED TO KNOW
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?
Most consumers use one or two cards
Figure 19: Number of credit cards used in the past 3 months, May 2019
Consumers are using their cards a lot; Gen Z only exception
Figure 20: Credit card use in past 30 days, May 2019
Who doesn’t have a credit card?
Figure 21: Consumers without a credit card, by area, race & ethnicity, and generation, May 2019
REWARDS EARN AND REDEMPTION
Cash(back) is king
Figure 22: Type of credit card rewards earned, May 2019
Multiple-card users follow predictable hierarchy: Cash > Points > Miles
Figure 23: Type of credit card rewards earned, by number of cards used in the past 3 months, May 2019
Cash & Points are the most popular combo; store cards lure Gen Z and Millennials
Figure 24: Most popular rewards combinations among consumers with 2+ Credit cards, May 2019
When redeeming, cash wins out (even among travel cardholders)
Figure 25: Most popular rewards redemption method, May 2019
MOTIVATION TO APPLY
Consumers aren’t highly motivated, but cash and lack of fees are the most enticing
Figure 26: Motivating factors to apply for a credit card, May 2019
Balance transfers and credit building cards have youth appeal
Figure 27: Motivating factors to apply for a credit card, by age, May 2019
CREDIT CARD BEHAVIORS
Young consumers more likely to game system, to be gamed by it
Figure 28: Credit card rewards redemption and expiry trends, by age, May 2019
Carrying a credit card balance is quite common
Figure 29: Paying credit card balance in full, by race & ethnicity, May 2019
Parents tend to game the system a bit more
Figure 30: General credit card behaviors, by parental status, May 2019
ATTITUDES TOWARD CARDS
Consumers are willing to pay, and looks matter
Figure 31: Attitudes toward physical card, and card rewards, by age, may 2019
Touting security benefits could drive mobile wallet adoption
Figure 32: Attitudes toward credit card security and mobile wallet use, May 2019
APPENDIX – DATA SOURCES AND ABBREVIATIONS
Data sources
Consumer survey data
Direct marketing creative
Abbreviations and terms
Abbreviations
CHAID Methodology

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