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Credit Cards - UK - August 2017

Published By :

Mintel

Published Date : Aug 2017

Category :

Cards & Payments

No. of Pages : N/A

Credit cards have become increasing accessible and affordable through a glut of good deals, whether people are looking to be actively rewarded for spending or are simply in the market for a plastic safety net. Rapid growth over the past five years has attracted attention from the regulators, and any intervention is likely to mean future growth is subject to limitations.
Table of contents

OVERVIEW
What you need to know
Products covered in this Report
EXECUTIVE SUMMARY
The market
Growth in gross lending is expected to slow into 2020
Figure 1: Forecast of gross credit card lending (non-seasonally adjusted) Fan chart, 2012-22
Number of credit cards in issue stalls
Figure 2: Number of debit, credit and charge cards in issue, 2001-16
Higher-frequency, lower-value transactions reshape credit card use
Companies and brands
Lloyds Banking Group rivals Barclays for group market share
Figure 3: Estimated volume share of UK credit card market, by banking groups, May 2017
Providers struggle to make their brands stand out
Figure 4: Attitudes towards and usage of selected brands, May 2017
The consumer
More than two thirds of adults have at least one credit card
Figure 5: Number of cards owned, May 2017
More than a third have no outstanding credit card debt
One in five intend to take out a new credit card in the next 12 months
Figure 6: New credit card intentions, May 2017
Cashback and rewards shape credit card behaviours
Figure 7: Recent credit card behaviour, May 2017
Four in five credit card holders use them as a safety net
Figure 8: Attitudes towards credit cards, May 2017
Rewards and low costs are the most important features
Figure 9: Most important features of credit cards, May 2017
Cashback on spending keeps people feeling rewarded
Figure 10: Appeal of credit card rewards, May 2017
What we think
ISSUES AND INSIGHTS
Lengthy 0% balance transfers could be set for the chop
The facts
The implications
Money transfer facilities could lead the fightback against loans
The facts
The implications
THE MARKET WHAT YOU NEED TO KNOW
Growth in gross lending is expected to slow into 2020
Number of credit cards in issue stalls
Higher-frequency, lower-value transactions reshape credit card use
Credit cards fail to keep pace with other consumer credit
FCA, PRA and Bank of England make credit concerns a priority
MARKET SIZE AND FORECAST
Growth in gross lending expected to grow by at least 5% in 2017
Figure 11: Gross and net credit card lending (non-seasonally adjusted), 2012-17
Gross lending is expected to slow marginally in the next few years
Figure 12: Forecast of gross credit card lending (non-seasonally adjusted) Fan chart, 2012-22
Figure 13: Forecast of gross credit card lending, 2012-22
Forecast methodology
SIZE OF THE PAYMENT CARD MARKET
Number of credit cards in issue stalls
Figure 14: Number of debit, credit and charge cards in issue, 2001-16
and the proportion of credit cards in use remains just over two thirds
Figure 15: Level of credit card debt, May 2017
CARD SPENDING PATTERNS
Higher-frequency, lower-value transactions reshape credit card use
Higher interest rates and regulatory action could hinder attractiveness of cards
Figure 16: Volume and value of credit and debit card purchase transactions*, 2012-16
MARKET DRIVERS
Credit cards fail to keep pace with growth in other consumer credit
Figure 17: Gross consumer credit lending (excluding student loans), 2010-16
Credit card rates have settled just below 18%
Figure 18: UK interest rates, January 2010-May 2017
Improvement in financial wellbeing has been shaken by Brexit
Figure 19: The financial wellbeing index, January 2016-June 2017
Credit card write-offs have started to grow again
Figure 20: Value of write-offs to loans to individuals (non-seasonally adjusted), 2010-16
Fraud losses continue to grow
Figure 21: Annual plastic fraud losses on UK-issued cards, 2010-16
REGULATORY AND LEGISLATIVE CHANGES
FCA publishes new rules to alleviate persistent credit card debt
Rules aim to help people repay debts faster
Bank of England begins crackdown on bad debt
Open Banking and PSD2 set to shape the future of the credit card market
CMAs open banking remedies
PSD2
Surcharges for paying by credit card to be abolished
COMPANIES AND BRANDS WHAT YOU NEED TO KNOW
Lloyds Banking Group rivals Barclays for group market share
Longer interest-free periods and money transfers shape strategies
Credit card advertising spend returns to growth
Providers struggle to make their brands stand out
MARKET SHARE
Barclaycard continues to dominate credit card ownership
Tesco Bank is second among those with two or more cards
Figure 22: Credit card providers (individual brands), by single, multiple and total card ownership, May 2017
Lloyds Banking Group rivals Barclays for group share
Figure 23: Estimated volume share of UK credit card market, by banking groups, May 2017
COMPETITIVE STRATEGIES
Longer interest-free periods mean big business
MBNA
Virgin Money
nuba
Money transfer credit cards fight back against loans
Virgin Money
MBNA
Retailer cards offer attractive benefits for frequent shoppers
Tesco Bank
Amazon
ADVERTISING AND MARKETING ACTIVITY
Credit card above-the-line adspend recovers strongly
Figure 24: Total above-the-line, online display and direct mail advertising expenditure on plastic cards, 2014/15-2016/17*
American Express increases adspend to rival Barclaycard
Figure 25: Top 10 above-the-line, online display and direct mail advertising expenditure on credit and charge cards, 2014/15-2016/17*
Direct mail attracts growing investment
Figure 26: Total above-the-line, online display and direct mail advertising expenditure on credit and charge cards, by media type, 2014/15-2016/17*
Online advertising and SEO enable ultimate targeting
Nielsen Ad Intel coverage
BRAND RESEARCH
What you need to know
Brand map
Figure 27: Attitudes towards and usage of selected brands, May 2017
Key brand metrics
Figure 28: Key metrics for selected brands, May 2017
Brand attitudes: American Express stands out from the crowd
Figure 29: Attitudes, by brand, May 2017
Brand personality: The Co-operative Bank is hampered by unappealing image
Figure 30: Brand personality Macro image, May 2017
Retail banks dominate key characteristics for finance brands
Figure 31: Brand personality Micro image, May 2017
Brand analysis
Retailer-affiliated brands struggle against financial services heavyweights
Main retail banks and building societies lean on good reputation
MBNA and Capital One struggle to differentiate from competitors and each other
American Express and Barclaycard stand apart from the rest of the market
The Co-operative Bank struggles with negative perceptions
THE CONSUMER WHAT YOU NEED TO KNOW
More than two thirds of adults have at least one credit card
More than a third have no outstanding credit card debt
Cashback and rewards shape credit card behaviours
Four in five credit card holders use them as a safety net
Rewards and low costs are the most important features
Cashback on spending keeps people feeling rewarded
CREDIT CARD OWNERSHIP
More than two thirds of adults have at least one credit card
Figure 32: Number of credit cards owned, May 2017
Women are more likely to have no credit cards at all
Figure 33: Number of cards owned, by gender, May 2017
Higher-income households are most likely to have more than one credit card
Figure 34: Number of cards owned, by gross annual household income, May 2017
LEVEL OF CREDIT CARD DEBT
More than a third have no outstanding credit card debt
More than a third of cardholders owe more than 1,000
Figure 35: Level of credit card debt, May 2017
Figure 36: Level of credit card debt, May 2017
One in 10 18-24s owe more than 10,000 on credit cards
Figure 37: Level of credit card debt, by age, May 2017
CREDIT CARD INTENTIONS
One in five intend to take out a new credit card in the next 12 months
Figure 38: New credit card intentions, May 2017
Those with two cards are most likely to be seeking another
Figure 39: People who intend to take out a credit card in the next 12 months, by number of existing credit cards held, May 2017
Younger people are the most open to new cards
Figure 40: People who intend to take out a new credit card in the next 12 months, by age, May 2017
RECENT CREDIT CARD BEHAVIOUR
Cashback and rewards shape credit card behaviours
Figure 41: Recent credit card behaviour, May 2017
More than a quarter of cardholders have maintained status quo
Figure 42: Recent credit card behaviour, active versus inactive, May 2017
Youngest age groups seek higher credit limit
Figure 43: Recent credit card behaviour, by age, May 2017
Higher-income households are the most active with their credit cards
Figure 44: Recent credit card behaviour, by gross annual household income, May 2017
ATTITUDES TOWARDS CREDIT CARDS
Four in five credit card holders use them as a safety net
57% like the convenience of holding a credit card with a main bank
70% say credit cards are more flexible than loans
Figure 45: Attitudes towards credit cards, May 2017
Young bank customers could be tempted away by challengers
Figure 46: Attitudes towards credit cards, by generation, May 2017
MOST IMPORTANT FEATURES OF CREDIT CARDS
Rewards and low costs lead the way
but few look for money transfer facilities
Figure 47: Most important features of credit cards, May 2017
Balance management shapes credit card activity
Figure 48: Most important features of credit cards, by outstanding credit card debt, May 2017
People looking for new cards show interest in money transfer
Figure 49: Most important features of credit cards, by new credit card intentions, May 2017
Generation X seek both lengthy 0% balance transfers and other rewards
Figure 50: Importance of balance transfers and rewards, by generation, May 2017
and younger people want high credit limits and improved credit scores
APPEAL OF CREDIT CARD REWARDS
Cashback on spending keeps people feeling rewarded
Open banking offers opportunities to deliver more personalised rewards
Figure 51: Appeal of credit card rewards, May 2017
Zero-debt cardholders focus on spending rewards
Figure 52: Appeal of credit card rewards, May 2017
APPENDIX DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Consumer research methodology
APPENDIX MARKET SIZE AND FORECAST
Figure 53: Forecast of gross credit card lending (non-seasonally adjusted), at constant and current prices, 2017-22
Forecast methodology

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