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Consumers and Credit Cards - US - July 2016

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.

This report will cover the following areas:

  • Outstanding revolving consumer credit nears $1 trillion
  • Few fundamental objections to having debt
  • Card security is a major concern

The purpose of this Report is to gain a better understanding of consumers’ attitudes and behaviors toward credit cards. The application process is also addressed to uncover potential pain points or opportunities for credit card providers.

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Table of contents

  1. 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

                                                                        Companies Covered

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                                                                        Consumers and Credit Cards - US - July 2016

                                                                        US $3,995.00 (Excl.Tax)