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Credit Cards - UK - August 2019

Covered in this report

For the purposes of this report, Mintel uses the following definitions:

Credit card – a plastic payment card, which allows the cardholder to pay for goods and services on credit, up to a pre-agreed limit. It offers an added advantage over paying by debit card, in that purchases over £100 (and up to £30,000) are covered under Section 75 of the Consumer Credit Act. It can also be used for cash acquisition, although there is usually an additional fee for ATM withdrawals.

The credit facility allows the cardholder to have a revolving balance, which can be paid off over a period of time. There is typically an interest-free period of up to 56 days from the date of purchase, after which time interest will be charged on any outstanding balance. If balances are not repaid in full, the cardholder will be required to make a minimum monthly payment (usually the higher of £25 or 1% of the balance, plus any interest and fees owed)


“People continue to use their credit cards for spending, making the most of benefits and extra protection. They are hesitant about taking on unnecessary debt and are keen to repay as soon as possible. Providers are rethinking their proposition, to meet the needs of both transactors and borrowers amid the threat of disruption from challengers. In a competitive market, support and flexibility will be key.”
– Irene Salazar, Senior Financial Services Analyst

This report looks at the following areas:

  • Market focus on responsible lending and sustainable borrowing
  • Renewed interest in credit scores
  • Cash(back) is king

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Table of contents

  1. Overview

    • What you need to know
      • Products covered in this Report
      • Executive Summary

          • The market
            • Gross credit card lending keeps on rising but net lending contracts
              • Figure 1: Net consumer credit lending, by type of credit (non-seasonally adjusted), 2009-18
            • Growth to continue as consumers take advantage of extra benefits
              • Figure 2: Forecast of gross credit card lending (non-seasonally adjusted) – Fan chart, 2014-24
            • Balance transfer activity falls
              • Regulatory focus on protecting vulnerable borrowers
                • Consumer sentiment and confidence rise despite Brexit uncertainty
                  • Companies and brands
                    • Barclaycard is the largest individual provider
                      • Figure 3: Largest credit and charge card providers in the UK, by share of customers, May 2019
                    • Flexible repayments offer consumers choice
                      • Providers signal that they have customers’ best interests at heart
                        • Rethink of benefits, rewards and loyalty among established brands
                          • Challengers continue to innovate and disrupt the credit card market
                            • Above-the-line adspend recovers driven by high-profile TV campaigns
                              • The consumer
                                • 71% of online adults have a credit card
                                  • Figure 4: Credit card ownership, May 2019
                                • Two thirds of borrowers expect to pay off balance within a year
                                  • Figure 5: Time expected to pay off credit card balance, May 2019
                                • No overwhelmingly dominant reason for owning a credit card
                                  • Figure 6: Reasons for owning a credit card, May 2019
                                • Satisfaction is high but rates and benefits may become deal breakers
                                  • Figure 7: Satisfaction with features of main credit card, May 2019
                                • People like easy-to-access benefits and cash(back) is king
                                  • Figure 8: Interest in credit card features, May 2019
                                • People trust traditional providers over tech giants and challengers
                                  • Figure 9: Interest in alternative credit card providers, May 2019
                                • What we think
                                • Issues and Insights

                                  • Market focus on responsible lending and sustainable borrowing
                                    • The facts
                                      • The implications
                                        • Renewed interest in credit scores
                                          • The facts
                                            • The implications
                                              • Cash(back) is king
                                                • The facts
                                                  • The implications
                                                  • The Market – What You Need to Know

                                                    • Gross credit card lending keeps on rising but net lending contracts
                                                      • Growth to continue as consumers take advantage of extra benefits
                                                        • Balance transfer activity falls
                                                          • Regulatory focus on protecting vulnerable borrowers
                                                            • Consumer sentiment and confidence rise
                                                            • Market Size and Forecast

                                                              • Gross credit card lending continues to rise
                                                                • Figure 10: Gross and net credit card lending (non-seasonally adjusted), 2014-19
                                                              • Gross lending expected to grow steadily
                                                                • Figure 11: Forecast of gross credit card lending (non-seasonally adjusted) – Fan chart, 2014-24
                                                                • Figure 12: Forecast of gross credit card lending, at current and constant prices, 2019-24
                                                              • Forecast methodology
                                                              • Cards and Spending Patterns

                                                                • Number of credit cards in issue remains stable
                                                                  • Figure 13: Number of debit and credit cards in issue, 2004-18
                                                                • Balance transfer activity falls
                                                                  • Figure 14: Volume and value of credit card transactions by UK residents, by type of transaction, 2014-18
                                                                • Credit cards continue to be used for lower-value transactions
                                                                  • Figure 15: Average credit card transaction value, by type of transaction, 2014-18
                                                                • 75% of credit cards are contactless
                                                                  • Figure 16: Payment cards with contactless functionality, April 2019
                                                              • Payments Market

                                                                • Credit card transactions expected to grow by 27% by 2028
                                                                  • Figure 17: Volume of payments, by type, 2018 and 2028
                                                                • Credit cards account for 8% of all payments in the UK
                                                                  • Figure 18: Share of total payment volumes, by payment type, 2018
                                                              • Channels to Market

                                                                  • Price comparison sites are the main channel used for research
                                                                    • Figure 19: Credit card research channels, March 2019
                                                                  • 77% apply online or in-app
                                                                    • Figure 20: Credit card purchase channels, March 2019
                                                                  • Cardholders more likely to go to a provider other than their main bank
                                                                    • Figure 21: Financial products ownership, by proportion held with main current account provider, June 2018
                                                                • Market Drivers

                                                                  • Gross credit card lending growing faster than other unsecured credit
                                                                    • Figure 22: Gross consumer lending, by type of credit (non-seasonally adjusted), 2009-18
                                                                  • Net credit card lending has contracted for first time in five years
                                                                    • Figure 23: Net consumer credit lending, by type of credit (non-seasonally adjusted), 2009-18
                                                                  • Total credit card debt outstanding grew by 3% in 2018
                                                                    • Figure 24: Amounts outstanding of credit card and other unsecured lending (non-seasonally adjusted), 2009-18
                                                                  • Credit card write-offs remain stable in 2018
                                                                    • Figure 25: Annual write-offs of lending to individuals, by type of credit, 2009-18
                                                                  • Credit card rates overtake overdrafts
                                                                    • Figure 26: Base interest rate, SONIA and consumer credit quoted interest rates to UK households, June 2015-June 2019
                                                                  • Financial wellbeing is up in 2019
                                                                    • Figure 27: Financial wellbeing index, May 2015-May 2019
                                                                  • Financial confidence rises
                                                                    • Figure 28: Index of consumer sentiment for the coming year, May 2015-May 2019
                                                                • Regulatory and Legislative Changes

                                                                  • Helping people in persistent debt
                                                                    • Overhaul to ‘dysfunctional’ overdraft market
                                                                      • Renewed focus on vulnerable people…
                                                                        • …and affordable credit
                                                                          • PPI deadline looms
                                                                            • NPSO rebranded Pay.UK
                                                                            • Companies and Brands – What You Need to Know

                                                                              • Barclaycard is the largest individual provider
                                                                                • Flexible repayments offer consumers choice
                                                                                  • Providers signal that they have customers’ best interests at heart
                                                                                    • Rethink of benefits, rewards and loyalty among established brands
                                                                                      • Challengers continue to innovate and disrupt the credit card market
                                                                                        • Above-the-line adspend recovers driven by high-profile TV campaigns
                                                                                        • Market Share

                                                                                          • Barclaycard is the largest individual provider
                                                                                            • Figure 29: Largest credit and charge card providers in the UK, by share of customers, May 2019
                                                                                          • Older consumers more likely to deal with multiple providers
                                                                                            • Figure 30: Repertoire of number of credit card providers used, by age, May 2019
                                                                                        • Competitive Strategies

                                                                                          • Flexible repayments offer consumers choice
                                                                                            • Providers signal that they have customers’ best interests at heart
                                                                                              • Barclaycard launches and heavily promotes its repayment calculator
                                                                                                • Comparethemarket.com goes beyond meerkats to focus on product
                                                                                                  • Providers rethinking benefits, rewards and loyalty
                                                                                                    • HSBC launches new rewards card incentivising loyalty
                                                                                                      • CYBG’s rebrand into Virgin Money will highlight Virgin rewards
                                                                                                        • Amazon cuts credit card rewards on non-Amazon purchases
                                                                                                          • Less choice for overseas benefits from established providers
                                                                                                            • Saga withdraws its Platinum card
                                                                                                              • Barclaycard Platinum removes free overseas usage for new customers
                                                                                                                • Open Banking and Credit Cards
                                                                                                                • Launch Activity and Innovation

                                                                                                                  • Apple launches a credit card in the US
                                                                                                                    • New provider Jaja acquires BoI’s UK credit card portfolio
                                                                                                                      • Figure 31: Jaja credit card and app
                                                                                                                    • Tandem adds credit building card
                                                                                                                      • Figure 32: Tandem Journey credit card
                                                                                                                    • Curve extends its cashback offer
                                                                                                                      • Zopa gets banking licence and looks to launch credit cards
                                                                                                                        • Innovative solutions and the blurring of credit…
                                                                                                                          • …led by a mix of foreign players, established brands and UK start-ups
                                                                                                                            • Coming soon: Zilch
                                                                                                                            • Advertising and Marketing Activity

                                                                                                                              • Credit card above-the-line adspend recovers…
                                                                                                                                • Figure 33: Total above-the-line, online display and direct mail advertising expenditure on credit and charge cards, 2014/15-2018/19
                                                                                                                              • …driven by increased spend on TV ads…
                                                                                                                                • Figure 34: Above-the-line advertising expenditure on credit and charge cards, by media type, 2014/15-2018/19
                                                                                                                              • …led by Barclaycard
                                                                                                                                • Figure 35: Top 15 above-the-line, direct mail and online display advertisers of payment cards, 2016/17-2018/19
                                                                                                                              • Nielsen Ad Intel coverage
                                                                                                                              • Brand Research

                                                                                                                                  • What you need to know
                                                                                                                                    • Brand map
                                                                                                                                      • Figure 36: Attitudes towards and usage of selected brands in the credit card market, May 2019
                                                                                                                                    • Key brand metrics
                                                                                                                                      • Figure 37: Key metrics for selected brands in the credit card market, May 2019
                                                                                                                                    • Brand attitudes: Tesco Bank perceived as rewarding loyalty
                                                                                                                                      • Figure 38: Attitudes, by brand, May 2019
                                                                                                                                    • Brand personality: American Express seen as exclusive
                                                                                                                                      • Figure 39: Brand personality – Macro image, May 2019
                                                                                                                                    • High street banks leverage their expertise and scope
                                                                                                                                      • Figure 40: Brand personality – Micro image, May 2019
                                                                                                                                    • Brand analysis
                                                                                                                                      • High street banks benefit from size, recognisable brand and high usage
                                                                                                                                        • American Express’ strong brand is highly differentiated
                                                                                                                                          • Other specialists lose out on trust
                                                                                                                                          • The Consumer – What You Need to Know

                                                                                                                                            • 71% of online adults have a credit card
                                                                                                                                              • Two thirds of borrowers expect to pay off credit card debt within a year
                                                                                                                                                • No overwhelmingly dominant reason for owning a credit card
                                                                                                                                                  • Satisfaction is high but rates and benefits may become deal breakers
                                                                                                                                                    • People like easy-to-access benefits and cash(back) is king
                                                                                                                                                      • People trust traditional providers over tech giants and challengers
                                                                                                                                                      • Credit Card Ownership

                                                                                                                                                        • 71% of adults have a credit card
                                                                                                                                                          • Figure 41: Credit card ownership, May 2019
                                                                                                                                                        • 44% of cardholders own two or more cards
                                                                                                                                                          • Figure 42: Number of credit cards owned, May 2019
                                                                                                                                                      • Credit Card Balance Status

                                                                                                                                                        • 36% of cardholders have an outstanding balance
                                                                                                                                                          • Figure 43: Proportion with an outstanding credit card balance, May 2019
                                                                                                                                                        • Two thirds of borrowers expect to pay off within a year…
                                                                                                                                                          • …but more than 10% expect to carry their balance for over two years
                                                                                                                                                            • Figure 44: Time expected to pay off credit card balance, May 2019
                                                                                                                                                          • Borrowers with multiple cards are more at risk of persistent debt
                                                                                                                                                            • Figure 45: Time expected to pay off credit card balance, by number of credit cards owned, May 2019
                                                                                                                                                        • Reasons for Owning a Credit Card

                                                                                                                                                          • People want credit cards to finance large purchases…
                                                                                                                                                            • …and to provide peace of mind…
                                                                                                                                                              • …including overseas
                                                                                                                                                                • 17% want to improve their credit score
                                                                                                                                                                  • Looking beyond benefits
                                                                                                                                                                    • Figure 46: Reasons for owning a credit card, May 2019
                                                                                                                                                                • Satisfaction with Main Credit Card

                                                                                                                                                                  • People are happy with basic product features
                                                                                                                                                                    • The relationship can always improve
                                                                                                                                                                      • Scope for a more competitive market…
                                                                                                                                                                        • Figure 47: Satisfaction with features of main credit card, May 2019
                                                                                                                                                                      • …but vast majority of cardholders are ultimately satisfied with their card
                                                                                                                                                                        • Figure 48: Overall satisfaction with main credit card, May 2019
                                                                                                                                                                    • Satisfaction: Key Driver Analysis

                                                                                                                                                                        • Leveraging the positives
                                                                                                                                                                          • Figure 49: Key drivers of overall satisfaction with credit card used most frequently, May 2019
                                                                                                                                                                          • Figure 50: Overall satisfaction with main credit card – key driver output, May 2019
                                                                                                                                                                        • Building trust
                                                                                                                                                                          • Room for improvement: overseas fees
                                                                                                                                                                            • Rates and benefits: deal breakers?
                                                                                                                                                                            • Interest in Credit Card Features

                                                                                                                                                                              • People like easy-to-access benefits
                                                                                                                                                                                • A message around privacy is likely to resonate
                                                                                                                                                                                  • Once again, overseas fees are a good differentiator
                                                                                                                                                                                    • Figure 51: Interest in credit card features, May 2019
                                                                                                                                                                                  • Credit score building features as a rewarding extra
                                                                                                                                                                                    • Figure 52: Interest in credit card features – CHAID – Tree output, May 2019
                                                                                                                                                                                  • TURF Analysis: cash(back) is king…
                                                                                                                                                                                    • …and can be personalised, flexible and exciting
                                                                                                                                                                                      • Figure 53: Interest in credit card features – TURF Analysis, May 2019
                                                                                                                                                                                  • Interest in Alternative Credit Card Providers

                                                                                                                                                                                    • People trust traditional financial services providers
                                                                                                                                                                                      • 30% simply don’t know
                                                                                                                                                                                        • Figure 54: Interest in alternative credit card providers, May 2019
                                                                                                                                                                                      • Stark differences by demographics
                                                                                                                                                                                        • Figure 55: Appeal of alternative credit card providers, by age, May 2019
                                                                                                                                                                                    • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                                                                        • Abbreviations
                                                                                                                                                                                          • Consumer research methodology
                                                                                                                                                                                            • Key Driver Analysis methodology
                                                                                                                                                                                              • Interpretation of results
                                                                                                                                                                                                • Figure 56: Overall satisfaction with main credit card – key driver output, May 2019
                                                                                                                                                                                                • Figure 57: Satisfaction with main credit card, by feature, May 2019
                                                                                                                                                                                              • CHAID analysis methodology
                                                                                                                                                                                                • Figure 58: Interest in credit card features CHAID analysis – Table output, May 2019
                                                                                                                                                                                                • Figure 59: Number of credit cards CHAID analysis – table output, May 2019
                                                                                                                                                                                                • Figure 60: Credit card balance status CHAID analysis – Table output, May 2019
                                                                                                                                                                                              • TURF analysis methodology
                                                                                                                                                                                                • Figure 61: Credit cards TURF analysis – Table output, May 2019
                                                                                                                                                                                            • Appendix – Market Size and Forecast

                                                                                                                                                                                              • Market forecast – Best- and worst-case scenarios
                                                                                                                                                                                                • Figure 62: Forecast of gross credit card lending, at current and constant prices, 2019-24
                                                                                                                                                                                              • Forecast methodology

                                                                                                                                                                                              Credit Cards - UK - August 2019

                                                                                                                                                                                              £1,995.00 (Excl.Tax)