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Credit Cards - Ireland - March 2009

The credit crunch and subsequent recession have dealt a heavy blow to the credit card market, affecting both providers and consumers. Tighter lending criteria are forcing providers to re-evaluate who they can afford to lend to, while consumers are having to rethink their spending habits and prioritise repayment commitments.

The next few years is set to see credit card usage and spending decline considerably in comparison to the Celtic Tiger era, and it is difficult to see how far credit card providers will have to go in terms of special offers and promotions in order to stimulate activity in the market.

Key themes in the report

  • How competitive are credit cards in relation to other forms of credit, and what role do they play?

  • To what extent has the credit crunch affected the spending habits of Irish consumers?

  • What factors are driving or impeding the growth of the credit card market?

  • What are the key areas of innovation in the market?

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Table of contents

  1. Issues in the Market

      • Key themes in the report
        • Report definition
          • Abbreviations
          • Insights and Opportunities

            • The fear factor
              • Bargain basement
                • Something to rival debit cards
                • Market in Brief

                  • The recession – the credit card market’s greatest threat
                    • Narrowing gap between credit and debit card ownership
                      • Credit card ownership on the up
                        • No purchase too small?
                          • Consumers are penny pinching as the recession tightens its grip
                            • A divided bunch of spenders
                            • Fast Forward Trends

                                • Trend 1: Universal Uncertainty
                                  • What's it about?
                                    • What we’ve seen
                                      • Specifics
                                        • What next?
                                          • Trend 2: You are in Control
                                            • What's it about?
                                              • What we’ve seen
                                                • Specifics
                                                  • What next?
                                                  • Internal Market Environment

                                                    • Key points
                                                      • Luxury-loving consumers fuelling growth of credit spending
                                                          • Figure 1: Value of residential mortgage and private sector credit lending to Irish residents, RoI, 2002-07
                                                        • No respite for credit card holders despite interest rate cuts
                                                          • Figure 2: Average annual UK and Euro Zone Interest rates, Jan 03-March 09
                                                        • Revised RoI Consumer Protection Code welcomed during hardship
                                                          • Changes to UK Banking Code to further protect borrowers
                                                            • Stamp duty on credit cards slashed
                                                              • Card fraud continues to be a real concern
                                                                • New developments on security measures
                                                                  • Initiatives taken on a company level
                                                                    • Growth of internet usage driving market forward
                                                                    • Broader Market Environment

                                                                      • Key points
                                                                        • From credit crunch to recession – financial services industry continues to feel the squeeze
                                                                            • Figure 3: Value of residential mortgage and private sector credit lending to Irish residents, RoI, Jun 06-Oct 08
                                                                          • Cross-border shopping – NI’s saving grace?
                                                                            • Figure 4: Economic outlook for NI and RoI, 2008-10
                                                                          • Implications for the credit card market
                                                                            • Ageing population bodes well for credit card market
                                                                              • Figure 5: Population projections, by age group, NI, 2006-26
                                                                              • Figure 6: Population projections, by age group, RoI, 2006-26
                                                                            • Cashless society
                                                                            • Competitive Context

                                                                              • Key points
                                                                                • Debit and credit cards continue to grow in popularity among consumers
                                                                                  • Gap between debit and credit card ownership in NI narrowing
                                                                                    • Figure 7: Debit and credit card/charge card penetration, NI, 2003-08
                                                                                  • Stamp duty remains an obstacle to RoI card uptake
                                                                                    • Figure 8: Debit and credit card/charge card penetration, RoI, 2003-08
                                                                                  • RoI market still growing while UK matures
                                                                                    • Figure 9: Number of Laser debit cards and credit cards in issue, RoI, 2002-07
                                                                                    • Figure 10: Number and value of Laser debit cards and credit card transactions, RoI, 2002-07
                                                                                    • Figure 11: Number of debit and credit cards in issue, UK, 2002-07
                                                                                    • Figure 12: Number and value of debit and credit cards transactions, UK, 2002-07
                                                                                  • Debit cards an essential part of everyday living
                                                                                      • Figure 13: Value of stamp duty charged per card per year, RoI, 2007 and 2008
                                                                                    • Demise of the cheque book continues
                                                                                      • Figure 14: Volume and value of cheques, RoI, 2005 and 2006
                                                                                      • Figure 15: Cheque volumes, UK, 2003-16
                                                                                  • Strengths and Weaknesses

                                                                                    • Strengths
                                                                                      • Weaknesses
                                                                                      • Market Value and Forecast

                                                                                        • Key points
                                                                                          • RoI credit card ownership gathers pace
                                                                                            • Figure 16: Estimated number of credit cards in issue, IoI, NI and RoI, 2004-13
                                                                                          • Conservative NI consumers vs extravagant RoI consumers
                                                                                            • Figure 17: Estimated volume of credit card transactions, IoI, NI, and RoI, 2004-13
                                                                                            • Figure 18: Estimated value of credit card transactions, IoI, NI and RoI , 2004-13
                                                                                            • Figure 19: Average monthly credit card spend by consumers, NI and RoI, 2008
                                                                                        • Who’s Innovating?

                                                                                          • Key points
                                                                                            • Covering all bases with new product offerings
                                                                                              • Business as usual for balance transfer providers
                                                                                                • Image is everything
                                                                                                  • Rewards for intrepid travellers and avid football fans
                                                                                                    • It’s easy being green
                                                                                                      • New market entrants
                                                                                                        • Prepaid cards offerings continue to flourish
                                                                                                          • Phone ‘swiping’ on the increase
                                                                                                          • Companies and Products

                                                                                                            • Key points
                                                                                                              • An Post Group
                                                                                                                • Abbey National plc
                                                                                                                  • Alliance & Leicester
                                                                                                                    • Allied Irish Bank (AIB)
                                                                                                                      • Asda Financial Services
                                                                                                                        • Bank of Ireland Group (BoI)
                                                                                                                          • Barclaycard
                                                                                                                            • Capital One Group
                                                                                                                              • Halifax (Bank of Scotland Ireland Limited)
                                                                                                                                • Halifax (Bank of Scotland plc)
                                                                                                                                  • HSBC Bank plc
                                                                                                                                    • MBNA Europe Bank Limited
                                                                                                                                      • Nationwide
                                                                                                                                        • National Irish Bank (NIB) and Northern Bank
                                                                                                                                          • Permanent TSB
                                                                                                                                            • Post Office
                                                                                                                                              • Sainsbury’s Finance
                                                                                                                                                • Tesco Personal Finance
                                                                                                                                                  • Ulster Bank Group
                                                                                                                                                    • 3V
                                                                                                                                                    • The Consumer – Credit Card Ownership

                                                                                                                                                      • Key points
                                                                                                                                                        • Card ownership in RoI catches up with NI
                                                                                                                                                            • Figure 20: Credit card/charge card penetration, NI and RoI, 2003-08
                                                                                                                                                          • Flexibility offered by credit a key market driver
                                                                                                                                                              • Figure 21: Number of credit cards held, by gender, NI and RoI, 2008
                                                                                                                                                            • The older and the wealthier prevail
                                                                                                                                                              • Consumers spending little and often
                                                                                                                                                                  • Figure 22: Average monthly spend on credit cards, NI, 2005-08
                                                                                                                                                                  • Figure 23: Average monthly spend on credit cards, RoI, 2005-08
                                                                                                                                                                • RoI’s spending priorities shift from holidays to meals
                                                                                                                                                                    • Figure 24: Goods and services purchased with credit/debit card in the last 12 months, NI, 2005-08
                                                                                                                                                                  • Convenience when travelling a key element for RoI consumers
                                                                                                                                                                    • RoI more debt conscious than NI
                                                                                                                                                                        • Figure 25: How credit balances were settled, NI and RoI, 2008
                                                                                                                                                                    • Consumer Target Groups

                                                                                                                                                                      • Key points
                                                                                                                                                                        • NI target groups
                                                                                                                                                                          • Figure 26: Consumer typologies, by agreement with statements relating to finance, NI, 2008
                                                                                                                                                                        • Responsible Spenders
                                                                                                                                                                          • Credit Newbies
                                                                                                                                                                            • Old School Spenders
                                                                                                                                                                              • Big Spenders
                                                                                                                                                                                • RoI target groups
                                                                                                                                                                                  • Figure 27: Consumer typologies by agreement with statements relating to finance, RoI, 2008
                                                                                                                                                                                • Impulse Purchasers
                                                                                                                                                                                  • Solo Shoppers
                                                                                                                                                                                    • Debt Avoiders
                                                                                                                                                                                      • Frivolous Spenders
                                                                                                                                                                                      • Appendix

                                                                                                                                                                                          • Figure 28: Areement with issues consumers are concerned about most during the current economic situation, NI and RoI, January 2009“In view of the current economic situation, which of the following issues are you MOST concerned about at the moment?
                                                                                                                                                                                          • Figure 29: Agreement with attitudes towards luxury, NI, 2003-08
                                                                                                                                                                                          • Figure 30: Agreement with attitudes towards luxury, RoI, 2003-08
                                                                                                                                                                                          • Figure 31: Number of credit cards held by consumers, NI and RoI, 2005-08
                                                                                                                                                                                          • Figure 32: NI clusters by agreement to statements relating to finance, 2008
                                                                                                                                                                                          • Figure 33: Population projections, by age group, NI, 2006-26
                                                                                                                                                                                          • Figure 34: Population projections, by age group, RoI, 2006-26
                                                                                                                                                                                          • Figure 35: Number of credit and debit cards in issue, number and value of credit and debit card transactions, RoI, 2000-07
                                                                                                                                                                                          • Figure 36: Number of credit and debit cards in issue, number and value of credit and debit card transactions, UK, 2002-07
                                                                                                                                                                                          • Figure 37: Plastic card ownership, NI, 2003-08
                                                                                                                                                                                          • Figure 38: Number of credit cards held, NI, 2003-08
                                                                                                                                                                                          • Figure 40: Credit cards – average monthly spend, NI, 2005-08
                                                                                                                                                                                          • Figure 41: How credit card balance was settled, NI, 2005-08
                                                                                                                                                                                          • Figure 42: Frequency of credit card usage, NI, 2003-08
                                                                                                                                                                                          • Figure 43: Frequency of debit card usage, NI, 2003-08
                                                                                                                                                                                          • Figure 44: Frequency of cheque book usage, NI, 2003-08
                                                                                                                                                                                          • Figure 45: Plastic card ownership, RoI, 2003-08
                                                                                                                                                                                          • Figure 46: Number of credit cards held, RoI, 2005-08
                                                                                                                                                                                          • Figure 47: Number of debit cards held, RoI, 2005-08
                                                                                                                                                                                          • Figure 48: Credit cards – average monthly spend, RoI, 2005-08
                                                                                                                                                                                          • Figure 49: How credit card balance was settled, RoI, 2005-08
                                                                                                                                                                                          • Figure 50: Frequency of credit card usage, RoI, 2003-08
                                                                                                                                                                                          • Figure 51: Frequency of cheque book usage, RoI, 2005-08
                                                                                                                                                                                          • Figure 52: Frequency of debit card usage, RoI, 2003-08
                                                                                                                                                                                          • Figure 53: Reasons for using an overdraft and/or credit card, NI, 2008
                                                                                                                                                                                          • Figure 54: Reasons for using an overdraft and/or credit card, RoI, 2008
                                                                                                                                                                                          • Figure 55: NI clusters, by demographic breakdown, 2008
                                                                                                                                                                                          • Figure 56: RoI clusters, by agreement with statements relating to finance, 2008
                                                                                                                                                                                          • Figure 57: RoI clusters by demographic breakdown, 2008

                                                                                                                                                                                      Companies Covered

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                                                                                                                                                                                      Credit Cards - Ireland - March 2009

                                                                                                                                                                                      £1,095.00 (Excl.Tax)