2020
9
UK Credit Cards Market Report 2020
2020-10-17T04:04:35+01:00
OX989030
2195
126127
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Report
en_GB
“COVID-19 has shaken the credit card sector as new lending collapsed and air miles lost their appeal as overseas travel was cut off. As the economy tentatively reopens, nervousness about…

UK Credit Cards Market Report 2020

£ 2,195 (Excl.Tax)

Report Summary

Providing the most comprehensive and up-to-date credit card statistics and analysis of the Attitudes towards the Credit Card market including the behaviours, preferences and habits of the consumer.

Gross credit card lending fell sharply during lockdown as consumers were unable to spend while those who could afford to focused on paying down their debts. Even as the economy has tentatively reopened, credit card lending has recovered more slowly as consumers remain wary about taking on debt and the increase in household deposits during lockdown has given consumers more choice about how to pay.

Quickly Understand

  • How will the economic fallout of COVID-19 affect consumer attitudes towards credit cards and the opportunities and threats this presents?
  • How do credit card companies seek to innovate to reach new customers and see off the threat from other types of credit?
  • How do different credit card demographics own and use credit cards?
  • What features of a credit card are being considered most important by different demographic groups?
  • What are the sources of information that consumers trust most to advise them on the most suitable credit card for their needs?

Covered in this report

Brands mentioned: Amazon NA NA, American Express, Aqua, Asda, Barclaycard, Capital One, Co-operative Bank/Smile, Curve, Clydesdale Bank/Yorkshire Bank NA, First Direct, Halifax/Bank of Scotland, HSBC, John Lewis/Waitrose, Lloyds Bank, MBNA, M&S Bank, Nationwide Building Society, NatWest/Royal Bank of Scotland, Post Office, Sainsbury’s Bank, Santander, Tandem, Tesco Bank, TSB Bank, Vanquis Bank, Virgin Money, etc.

Expert analysis from a specialist in the field

Written by Thomas Slide, a leading analyst in the Financial Services Sector, his extensive knowledge delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers in this credit card consumer report.

COVID-19 has shaken the consumer credit market as new lending collapsed and air miles lost their appeal as overseas travel was cut off. As the economy tentatively reopens, nervousness about borrowing means lending is recovering more slowly than spending. As young people turn their backs on credit cards in an increasingly competitive payments space, lenders need to think more holistically about how they support credit card customers throughout the entire purchase process.

Thomas Slide

Associate Director – Financial Services

Table of Contents

  1. Overview

    • Key issues covered in this Report
    • COVID-19: Market context
    • Economic and other assumptions
    • Products covered in this Report
  2. Executive Summary

    • Impact of COVID-19 on credit cards
      • Figure 1: Short, medium and long-term impact of COVID-19 on credit cards, September 2020
    • The market
    • Credit Card Market size and forecast
      • Figure 2: Forecast of gross credit card lending, 2015-25
    • A recession like no other
    • Contactless and COVID-19 are driving consumers from cash to cards
    • COVID creates a consumer confidence paradox
    • Companies and brands
    • Barclaycard dominates the credit card market
    • COVID-19 has demanded a rethink of credit card benefits
    • Advertising expenditure falls three years running
    • Barclaycard is the most trusted credit card brand
      • Figure 3: Key metrics for selected brands, June 2020
    • The consumer
    • Credit card holders are ageing
      • Figure 4: Credit card ownership, by age, July 2020
    • Barclaycard dominates credit card ownership
      • Figure 5: Credit card provider, July 2020
    • Credit cards serve a wide range of roles
      • Figure 6: How they use a credit card, July 2020
    • One in five pay the minimum or whatever they can afford
      • Figure 7: Repayment habits, July 2020
    • The importance of a physical card is dissipating
      • Figure 8: Important features when choosing a credit card, July 2020
    • Banks are the most trusted source when it comes to credit cards
      • Figure 9: Most trusted sources of information when choosing a new credit card, July 2020
  3. Issues and Insights

    • COVID-19 could prove a turning point for credit cards
    • The shifting profile of credit card holders
    • Building a credit card to re-engage young people
  4. The Market – Key Takeaways

    • Credit card lending won’t return to 2019 levels until 2023
    • An unbalanced recession and an uneven recovery
    • Shift to ecommerce presents opportunities
    • Rising discomfort with debt could prove a threat
  5. Market Size and Forecast

    • Impact of COVID-19 on credit cards
      • Figure 10: Short, medium and long-term impact of COVID-19 on credit cards, September 2020
    • COVID causes a severe drop in credit card usage
      • Figure 11: Forecast of gross credit card lending, 2015-25
      • Figure 12: Forecast of gross credit card lending at current prices, 2020-25
    • Market drivers and assumptions
      • Figure 13: Key drivers affecting Mintel’s market forecast, 2015-24 (prepared September 2020)
    • A very different recession
      • Figure 14: Gross and net credit card lending to individuals, 2007-12
    • Forecast methodology
  6. Economic Outlook

    • A recession like no other
      • Figure 15: Quarterly change in GDP, Q1 2008-Q2 2020
    • Forecasts predict a bounce-back in 2021
      • Figure 16: Forecast of annual GDP, 2019-24
    • Unemployment looks set to spike as government support unwinds
      • Figure 17: Unemployment rate, 2007-24
    • Retail sales recover but the way people spend has changed
      • Figure 18: Year-on-year change in retail sales, by sector, January-August 2020
  7. Market Environment

    • Credit card payments increase 7% in 2019
      • Figure 19: Payment volumes, 2015-19
    • Increase to contactless payment limit drives adoption
    • Credit card lending becoming a smaller part of the lending landscape
      • Figure 20: Segmentation of outstanding monthly lending to individuals, June 2015-June 2020
    • Credit cards and overdrafts become more expensive
      • Figure 21: Consumer credit rates, January 2016-August 2020
  8. Consumer Environment

    • COVID support creates a confidence paradox
    • Household finances will become more exposed to the crisis
      • Figure 22: Consumer confidence tracker, January 2018-August 2020
    • Consumers are increasingly focused on saving
      • Figure 23: Change in spending priorities between March and August 2020
    • Consumers are feeling increasingly comfortable about eating out
      • Figure 24: Comfort with activities, July-September 2020
    • Credit cards are preferred for high-value online purchases
      • Figure 25: Payment preferences, by type of purchase, November 2019
    • Older Millennials are feeling more uncomfortable with their debts
      • Figure 26: Net – Any uncomfortable with current level of debt, by generation, June 2019 and May 2020
  9. Regulatory and Legislative Changes

    • FCA focuses on ensuring consumer credit markets work well
    • COVID-19 support made available
    • SCA implementation delayed again
    • Increase in contactless payment limit
    • FCA clarifies advice for dealing with customers in persistent debt
    • Ban introduced on using credit cards to gamble
  10. Companies and Brands – Key Takeaways

    • Barclaycard dominates the credit card market
    • COVID-19 has demanded a rethink of credit card benefits
    • Taking a more holistic approach to the purchase process
    • New credit card models can better compete with BNPL
    • Alternative lending products leverage strong brands
  11. Market Share

    • More than a quarter of credit card holders have a Barclaycard
      • Figure 27: Customer share of leading credit card lenders, 2017-20
    • Leading players consolidate the market
      • Figure 28: Market share of credit card ownership, 2019 and 2020
    • M&S Bank has the oldest customer base
      • Figure 29: Customer profile of credit card providers, July 2020
  12. Competitive Strategies

    • Breaking down silos between Barclays and Barclaycard
    • American Express’ focus on premium customers yields rewards
    • COVID-19 demands extensions and changes
    • Support for the community takes on fresh importance
    • Creating a frictionless shopping experience
    • A focus on fraud
    • Cashback cards withdrawn from the market
  13. Credit Card Launch Activity and Innovation

    • Vitality Amex offers cashback for staying active
    • Quantifying the environmental impact of credit card spending
    • Credit card launches
    • Zopa launches first credit card offering
    • Jaja Finance replaces AA and Post Office-branded credit cards
    • Australian banks ditch interest rates to compete with BNPL
    • Fintechs eye credit card launches
    • Cashplus adds the time and location of every payment made
    • NatWest launches UK’s first biometric credit card
      • Figure 30: NatWest biometric credit card, October 2019
    • Alternative lending products
    • Koto launches in the UK
      • Figure 31: Koto Card
    • Curve Credit trialled
  14. Advertising and Credit Card Marketing Activity

    • Sharp drop in credit card advertising spend
      • Figure 32: Total above-the-line, online display and direct mail advertising expenditure on credit and charge cards, 2015/16-2019/20
    • COVID-19 has had a severe impact on adspend
      • Figure 33: Total above-the-line, online display and direct mail advertising expenditure on credit and charge cards, by month, January 2016-July 2020
    • Barclaycard dominates spending
      • Figure 34: Total above-the-line, online display and direct mail advertising expenditure on credit and charge cards, by advertiser, August 2019-July 2020
    • Nielsen Ad Intel coverage
  15. Brand Research

    • Brand map
      • Figure 35: Attitudes towards and usage of selected brands, June 2020
    • Key brand metrics
      • Figure 36: Key metrics for selected brands, June 2020
    • Brand attitudes: Barclaycard is a trusted brand with a great reputation
      • Figure 37: Attitudes, by brand, June 2020
    • Brand personality: PayPal Credit and Klarna create a fun brand image
      • Figure 38: Brand personality – macro image, June 2020
    • American Express is a prestigious and authoritative brand
      • Figure 39: Brand personality – micro image, June 2020
    • Brand analysis
    • Barclaycard is the most widely used and most trusted credit card brand
    • American Express stands apart and has an exclusive and authoritative brand
    • Retailer-branded credit cards reward loyalty and treat customers well
    • Weaker brand proposition of the other specialists
    • Alternative credit providers offer a more fun approach to lending
  16. The Consumer – Key Takeaways

    • Shifting demographics will change the dynamics of credit cards
    • Credit cards no longer simply compete with each other
    • Banks can break down silos to reach new customers
    • Create a community to generate word-of-mouth recommendations
  17. Credit Cards Held

    • Credit card ownership remains stable
      • Figure 40: Credit card ownership, 2017-20
    • Under-45s turn away from credit cards
      • Figure 41: Credit card ownership, by age, 2017-20
    • Card ownership is rising among low-income households
      • Figure 42: Personal credit card ownership, by household income, 2018-20
    • Almost half of over-65s have multiple credit cards
      • Figure 43: Number of credit cards held, by age, July 2020
  18. How They Use Credit Cards

    • Credit cards serve a variety of roles
      • Figure 44: How they use a credit card, July 2020
    • Older people are more likely to use their credit card for ecommerce
      • Figure 45: Use of credit cards to shop online, by age, July 2020
  19. Repayment Habits

    • One in five pay the minimum or whatever they can afford
      • Figure 46: Repayment habits, July 2020
    • Older users are most likely to clear the balance every month
      • Figure 47: Repayment habits, by age, July 2020
    • Foreign travellers and online shoppers pay the full balance
      • Figure 48: Repayment habits, by how they use a credit card, July 2020
    • M&S Bank and Amex customers prefer to pay in full
      • Figure 49: Repayment habits, by credit card provider, July 2020
  20. Important Features of a Credit Card

    • The importance of a physical card is dissipating
      • Figure 50: Important features when choosing a credit card, July 2020
    • Mobile apps are no longer a ‘nice to have’
      • Figure 51: Important features when choosing a credit card, by age, July 2020
    • Fintechs have shifted expectations around speed of information
      • Figure 52: Important features when choosing a credit card, by age, July 2020
  21. Trusted Sources of Information

    • Few trust credit card companies to recommend a credit card
      • Figure 53: Most trusted sources of information when choosing a new credit card, July 2020
    • Banks are best placed to reach new customers
      • Figure 54: Trusted sources of information when choosing a credit card, by credit card ownership, July 2020
    • Reaching Gen Z through word-of-mouth recommendations
      • Figure 55: Trusted sources of information when choosing a new credit card (selected options) (net any rank-selected sources), by generation, July 2020
  22. Appendix – Data Sources, Abbreviations and Supporting Information

    • Abbreviations
    • Consumer research methodology

About the report

This market report provides in-depth analysis and insight supported by a range of data. At the same time, introductory and top-level content is provided to give you an overview of the issues covered.

Market

Mintel provides a range of market information, frequently through the category level, including market size and forecasting, complete with market drivers that illustrate the forces that shape a category or market.

Consumer

Mintel’s proprietary consumer research provides our analysts with the attitudinal and behavioral data used to provide valuable insight to topical issues.

Brand/Company

Mintel provides overviews of the top brands and manufacturers, and uses consumer research to explore attitudes and reactions to brands, as well as insight into what will resonate with consumers.

Data

Market reports provide appendices of data to support the research and insight produced. Our databooks* are easily manipulated and downloadable to support your research needs and covers factors from consumer attitudes to market forecasts.

*databooks not available with UK B2B Industry reports.

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