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Credit Cards - UK - August 2017

“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.”
– Patrick Ross, Senior Financial Services Analyst

This report looks at the following areas:

  • Lengthy 0% balance transfers could be set for the chop
  • Money transfer facilities could lead the fightback against loans

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Table of contents

  1. 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
                                                          • CMA’s 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, Barclaycard and Virgin Money 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

                                                                                                                                                Companies Covered

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

                                                                                                                                                Credit Cards - UK - August 2017

                                                                                                                                                US $2,648.76 (Excl.Tax)