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Credit Cards - Ireland - May 2011

This report examines the credit card market in both NI and RoI, examining their usage, trends within the market and how the recession has affected consumer willingness to use them. Debit cards are also examined, however the report focuses on credit card. The Market Value and Forecast section of this report focuses solely on credit cards and does not consider debit cards or other methods of payment.

Credit cards are used as a method of payment for purchases, whereby a credit issuer lends money to the credit card holder, charging interest on outstanding balances. The cardholder can choose to pay their outstanding balance each month in three ways: by minimum payment, partial payment and full payment.

There are several types of credit cards including balance transfer credit cards, reward credit cards, cashback credit cards and prepaid credit cards examined in this report, including:

  • Balance transfer credit cards – these cards allow consumers to transfer their balance from an existing credit card with a higher interest rate, to one with a lower interest rate, effectively saving them money in interest. For example, if transferring a balance to a credit card with a low introductory APR of 0%, the APR for this balance will typically stay at this 0% interest level for a specified period of time, which potentially saves the consumer money in interest charges. The terms of balance transfer credit cards can vary between offers.
  • Reward credit cards – these cards offer incentives for using the card, such as Air Miles and discounts off purchases.
  • Cashback credit cards – these cards give cash rewards for making purchases with the card. Examples of this include AIB’s Platinum Credit Card, which offers 0.5% cashback on purchase spends of over €5,000 in a 12-month period.
  • Charity/affinity cards – these cards usually offer some level of donation to a particular charity or institution, for example, Bank of Ireland’s Queen’s Affinity Card makes a £10 donation to Queen’s University Belfast.
  • Prepaid credit cards – these cards are prepaid using the cardholder’s own cash, to be used wherever credit cards are accepted. The advantages of using prepaid cards are that they help users to avoid getting in debt, in that all purchases are paid for beforehand. They are also suitable for those ineligible for credit cards, eg under-18s.
  • Charge card – a plastic card that enables the cardholder to make purchases and in some cases withdraw cash. Charge card balances must be settled in full when statements are issued (usually on a monthly basis).
  • Debit card – a plastic card linked to a bank account. With each purchase made using the card, money is withdrawn from the cardholder’s bank account.
  • Laser card – debit card scheme from Laser Card Services Ltd, which is owned and managed by the leading financial institutions in Ireland.
  • Stamp duty – stamp duties are levied on financial cards and credit card accounts. The duty is collected from cardholders by the financial institutions on behalf of Revenue authorities. Stamp duty is normally charged to the bank or credit/charge card account once a year.
  • Payday loans – these are short-term loans (usually cash loans) given to consumers that are intended to cover a borrower's expenses until his or her next payday. Payday loans usually carry a very high level of APR.

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Table of contents

  1. Issues in the Market

      • Key themes
        • Definitions
          • Abbreviations
          • Insights and Opportunities

            • Moving away from credit towards debit
              • High rejection rate could limit potential applications
                • Cards play a more important role in transactions
                • Market in Brief

                  • Recession taking its toll on the credit card market
                    • Fewer cards in issue, but more people have them
                      • Debit and laser cards see higher use
                      • Fast Forward Trends

                          • Trend 1: Patriot Games
                            • What’s it about?
                              • What we’ve seen
                                • What next?
                                  • Trend 2: Agelessness
                                    • What’s it about?
                                      • What we’ve seen
                                        • What next?
                                        • Internal Market Environment

                                          • Key points
                                            • The recession sees lending rates decline
                                              • Figure 1: Net credit card lending to individuals, by percentage change, UK, 2005-11
                                              • Figure 2: Outstanding indebtedness year-to-year change (%), RoI, 2005-11
                                            • Credit cards are comparatively more expensive to use
                                              • Figure 3: Interest rates, actual and forecast, NI and RoI, 2011
                                            • More sensible money management
                                              • Figure 4: Agreement with statement ‘I am more careful about how I use my credit card’, by age, NI and RoI, June 2011
                                            • Consumer access to credit limited
                                              • Consumers looking elsewhere
                                                • Figure 5: Effective interest rates on unsecured lending, UK, 2004-10
                                                • Figure 6: Indexed new business in the unsecured personal loans market, IoI, NI and RoI, 2004-11
                                              • Overdrafts see higher uptake, and many more resort to payday loan companies
                                                • Credit card market subject to more legislation
                                                  • RoI money lenders under tighter control
                                                    • Consumer unhappiness damages trust and brand image of credit card companies
                                                      • Record level of complaints to IFO
                                                        • Figure 7: Total number of complaints lodged with Irish Financial Ombudsman, 2007-10
                                                        • Figure 8: Total number of complaints lodged with Irish Financial Ombudsman, by sector, 2010
                                                        • Figure 9: Total number of banking complaints lodged with Irish Financial Ombudsman, by type of complaint, 2010
                                                      • UK Ombudsman has a record year also
                                                        • Figure 10: Total number of new complaints lodged with UK Financial Ombudsman, 2002-11*
                                                        • Figure 11: Total number of new complaints lodged with UK Financial Ombudsman, by sector, 2011*
                                                      • Fraud still a key concern for Irish consumers
                                                        • Changes in shopping patterns see less need to credit cards
                                                          • Figure 12: Ways in which shopping habits have changed in the last 12 months, RoI and NI, July 2010
                                                          • Figure 13: Agreement with the statement ‘I decide what I want before I do the weekly shopping’, NI and RoI, 2006-10
                                                        • Areas consumers have cut back
                                                          • Figure 14: Areas consumers have cut back spending in the last 12 months, RoI and NI, July 2010
                                                        • Online shopping a key channel for credit card usage
                                                          • Figure 15: Consumers with a broadband connection at home, RoI and NI, 2004-10
                                                      • Broader Market Environment

                                                        • Key points
                                                          • Rocky economies will reduce willingness to use cards
                                                            • Figure 16: Economic outlook, RoI and NI, 2008-10
                                                          • Low confidence = low spending
                                                            • Figure 17: Consumer Sentiment/Confidence Index, UK (inc NI) and RoI, May 2008-May 2011
                                                          • Low confidence affecting the nation’s health
                                                            • Ageing population is good news for credit card ownership
                                                              • Figure 18: Population, by age, RoI, 2006-41
                                                              • Figure 19: Population, by age, NI, 2008-58
                                                              • Figure 20: Ownership of a credit card, by age, NI and RoI, 2010
                                                            • The 18-24 segment: too risky for modern times?
                                                              • Student exodus
                                                                • Figure 21: Agreement with statement ‘Having to emigrate to find work/go to college’, by age, NI and RoI, June 2011
                                                            • Competitive Context

                                                              • Key points
                                                                • Cheque usage dwindling
                                                                  • Figure 22: Frequency of usage of chequebooks, NI and RoI, 2010
                                                                • Why are consumers turning their backs on cheques?
                                                                  • Phasing out cheques helps boost card usage
                                                                    • Pressure from the business sector prolongs the lifespan of cheques in the UK
                                                                      • High level of NI and RoI consumers prefer to pay cash
                                                                        • Figure 23: Agreement with the statement ‘I like to pay cash for everything I buy’, NI and RoI, 2006-10
                                                                        • Figure 24: Percentage of all transactions that cash accounts for, UK, 1999-2018
                                                                      • Alternative forms of credit
                                                                        • Figure 25: Consumers with a loan, NI and RoI, 2008-10
                                                                      • Overdraft overload
                                                                      • Strengths and Weaknesses

                                                                        • Strengths
                                                                          • Weaknesses
                                                                          • Who’s Innovating?

                                                                            • Key points
                                                                              • Why swipe when you can wave?
                                                                                • NFC technology could appeal to technophiles
                                                                                  • Prepaid cards showing green shoots
                                                                                    • Hybrid cards on the horizon
                                                                                    • Market Size and Forecast

                                                                                      • Key points
                                                                                        • Number of cards in issue declines in RoI and remains stagnant in NI
                                                                                          • Figure 26: Estimated number of credit cards in issue, IoI, NI and RoI, 2005-15
                                                                                        • Tighter restrictions will stifle the growth of credit cards issued
                                                                                          • Higher level of card transactions, despite lower level of cards
                                                                                            • Figure 27: Estimated volume of credit card transactions, IoI, NI, and RoI, 2005-15
                                                                                          • Boost from online shopping
                                                                                            • Figure 28: Agreement with the statement ‘To do my shopping by internet makes my life easier’, NI and RoI, 2005-10
                                                                                          • Value of card transactions slumps as consumers rein in their spending
                                                                                            • Figure 29: Estimated value of credit card transactions, IoI, NI and RoI, 2005-15
                                                                                        • Companies and Products

                                                                                          • Santander (Abbey National and Alliance & Leicester)
                                                                                              • Figure 30: Santander credit cards, 2011
                                                                                            • Barclaycard
                                                                                                • Figure 31: Barclaycard credit cards, 2011
                                                                                              • HSBC
                                                                                                  • Figure 32: HSBC credit card, 2011
                                                                                                • RBS Group
                                                                                                    • Figure 33: Ulster Bank credit cards, NI and RoI, 2011
                                                                                                  • AIB
                                                                                                      • Figure 34: AIB credit cards, 2011
                                                                                                    • Bank of Ireland (BoI)
                                                                                                        • Figure 35: BoI credit cards, 2011
                                                                                                      • Danske Bank Group (Northern Bank and National Irish Bank)
                                                                                                          • Figure 36: Northern Bank and NIB credit cards, 2011
                                                                                                        • Capital One
                                                                                                            • Figure 37: Capital One credit cards, 2011
                                                                                                          • MBNA Group
                                                                                                              • Figure 38: MBNA credit cards, 2011
                                                                                                            • Nationwide
                                                                                                                • Figure 39: Nationwide credit card, 2011
                                                                                                              • Permanent TSB
                                                                                                                  • Figure 40: Permanent TSB credit card, 2011
                                                                                                              • The Consumer – Credit Card Usage

                                                                                                                • Key points
                                                                                                                  • Debit cards see highest penetration among Irish consumers
                                                                                                                      • Figure 41: Type of plastic cards owned, NI and RoI, 2010
                                                                                                                      • Figure 42: Ownership of debit/laser cards, NI and RoI, 2007-10*
                                                                                                                    • Credit card penetration increases in Ireland
                                                                                                                      • Figure 43: Ownership of credit cards, NI and RoI, 2005-10
                                                                                                                    • Low levels of multiple credit card ownership
                                                                                                                      • Figure 44: Number of credit cards owned, NI and RoI, 2010
                                                                                                                    • Debit cards see more frequent usage than credit cards
                                                                                                                        • Figure 45: Frequency of usage of debit/laser cards vs. credit cards, NI and RoI, 2010
                                                                                                                      • What consumers buy with their credit/debit cards
                                                                                                                        • Figure 46: What consumers use their debit/credit cards to pay for, NI and RoI, 2010
                                                                                                                      • Petrol prices pump up card usage at forecourts
                                                                                                                        • Majority of consumers prefer to apply for cards in branches
                                                                                                                          • Figure 47: Where consumers apply for credit cards, NI and RoI, 2010
                                                                                                                          • Figure 48: Consumers who have used the internet in the last 12 months, by age, NI and RoI, 2010
                                                                                                                        • A quarter spend under £100/€150 on their credit card each month
                                                                                                                          • Figure 49: Average monthly spend on credit cards, NI and RoI, 2010
                                                                                                                        • Women more likely to spend more each month
                                                                                                                          • Figure 50: Consumers who spent an average of £150/€150 on their credit card each month, by gender, NI and RoI, 2010
                                                                                                                        • How consumers settle their credit card balance
                                                                                                                            • Figure 51: How consumers settle their credit card balance, NI and RoI, 2010
                                                                                                                          • Recession accelerating trend to make full repayments
                                                                                                                            • Figure 52: Consumers who settle their credit card balance with full repayment, NI and RoI, 2005-10
                                                                                                                          • Debit cards and cash main substitutes for credit cards
                                                                                                                              • Figure 53: What consumers do when their credit card is not accepted by service provider, NI and RoI, 2010
                                                                                                                          • Factors Influencing Choice of Credit Card

                                                                                                                            • Key points
                                                                                                                              • A low interest rate is key to attracting customers
                                                                                                                                • Figure 54: What consumers consider to be the most important factors when getting a credit card, NI and RoI, 2010
                                                                                                                              • Wide acceptance twice as important to RoI consumers
                                                                                                                                • 0% balance transfers seen as a good deal to cash-strapped consumers
                                                                                                                                  • No annual fee please
                                                                                                                                  • Attitudes towards Credit Cards and Finance

                                                                                                                                    • Key points
                                                                                                                                        • Figure 55: Agreement with selected statements relating to credit cards and finance, NI and RoI, 2010
                                                                                                                                      • Four out of five dislike the idea of being in debt
                                                                                                                                        • Figure 56: Agreement with the statement ‘I don't like the idea of being in debt’, NI and RoI, 2007-10
                                                                                                                                      • Fear of debt grows with age
                                                                                                                                        • Figure 57: Agreement with the statement ‘I don't like the idea of being in debt’, by age, NI and RoI, 2010
                                                                                                                                      • Consumers are spending more carefully
                                                                                                                                        • Figure 58: Agreement with the statement ‘I spend money more carefully than I used to’, NI and RoI, 2005-10
                                                                                                                                      • Women more likely than men to save up for purchases
                                                                                                                                          • Figure 59: Agreement with the statement ‘If there's something I want I save up for it’, by gender, NI and RoI, 2010
                                                                                                                                        • Credit and loans seen as necessary evils by many
                                                                                                                                          • Young are not jaded about credit
                                                                                                                                            • Figure 60: Agreement with the statement ‘I only take out credit/loans when absolutely necessary’, by age, NI and RoI, 2010
                                                                                                                                          • Segment uses credit cards to live beyond their means
                                                                                                                                            • Figure 61: Agreement with the statement ‘With a credit card I can buy the sort of things I couldn't normally afford’, by marital status, NI and RoI, 2010
                                                                                                                                          • Credit cards tempt consumers to spend more than they should
                                                                                                                                          • Consumer Target Groups

                                                                                                                                            • NI target groups
                                                                                                                                              • Figure 62: NI consumer typologies, 2010
                                                                                                                                            • Uncaring
                                                                                                                                              • Non-debtors
                                                                                                                                                • Awakened
                                                                                                                                                  • Savers
                                                                                                                                                    • RoI target groups
                                                                                                                                                      • Figure 63: RoI consumer typologies, 2010
                                                                                                                                                    • Cautious Savers
                                                                                                                                                      • Multi-cards
                                                                                                                                                        • Poor Savers
                                                                                                                                                          • Unengaged
                                                                                                                                                          • Appendix

                                                                                                                                                            • Broader market environment
                                                                                                                                                              • Unemployment
                                                                                                                                                                • Figure 64: Unemployment rate, by gender, NI, 2005-10
                                                                                                                                                                • Figure 65: Unemployment rate, by gender, RoI, 2005-10
                                                                                                                                                                • Figure 66: Number of redundancies, by gender, RoI, 2005-09
                                                                                                                                                              • Credit card topline tables
                                                                                                                                                                • Figure 67: Type of plastic cards owned, NI and RoI, 2010
                                                                                                                                                                • Figure 68: What consumers use their debit/credit cards to pay for, NI and RoI, 2010
                                                                                                                                                                • Figure 69: How consumers apply for credit cards, NI and RoI, 2010
                                                                                                                                                                • Figure 70: How consumers settle their credit card balance, NI and RoI, 2010
                                                                                                                                                                • Figure 71: What consumers do when their credit card is not accepted by service provider, NI and RoI, 2010
                                                                                                                                                                • Figure 72: What consumers consider to be the most important factors when getting a credit card, NI and RoI, 2010
                                                                                                                                                              • Credit card tables – demographics
                                                                                                                                                                • Figure 73: Number of credit/debit cards owned, by demographics, RoI, 2010
                                                                                                                                                                • Figure 74: Number of credit cards owned, by demographics, RoI, 2010
                                                                                                                                                                • Figure 75: Number of debit cards owned, by demographics, RoI, 2010
                                                                                                                                                                • Figure 76: Number of debit/credit cards owned, by demographics, NI, 2010
                                                                                                                                                                • Figure 77: Number of credit cards owned, by demographics, NI, 2010
                                                                                                                                                                • Figure 78: Number of debit cards owned, by demographics, NI, 2010
                                                                                                                                                                • Figure 79: Frequency of usage of laser cards, by demographics, RoI, 2010
                                                                                                                                                                • Figure 80: Frequency of usage of credit cards, by demographics, RoI, 2010
                                                                                                                                                                • Figure 81: Frequency of usage of chequebooks, by demographics, RoI, 2010
                                                                                                                                                                • Figure 82: Frequency of usage of debit cards, by demographics, NI, 2010
                                                                                                                                                                • Figure 83: Frequency of usage of credit cards, by demographics, NI, 2010
                                                                                                                                                                • Figure 84: Frequency of usage of chequebooks, by demographics, NI, 2010
                                                                                                                                                                • Figure 85: Average monthly spend on credit cards, by demographics, RoI, 2010
                                                                                                                                                                • Figure 86: Average monthly spend on credit cards, by demographics, NI, 2010
                                                                                                                                                              • Finance statements – by demographics
                                                                                                                                                                • Figure 87: Agreement with selected statements relating to credit cards and finance, by demographics, RoI, 2010
                                                                                                                                                                • Figure 88: Agreement with selected statements relating to credit cards and finance, by demographics, RoI, 2010
                                                                                                                                                                • Figure 89: Agreement with selected statements relating to credit cards and finance, by demographics, NI, 2010
                                                                                                                                                                • Figure 90: Agreement with selected statements relating to credit cards and finance, by demographics, NI, 2010

                                                                                                                                                            Companies Covered

                                                                                                                                                            To learn more about the companies covered in this report please contact us.

                                                                                                                                                            Credit Cards - Ireland - May 2011

                                                                                                                                                            £1,095.00 (Excl.Tax)