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.