2021
9
UK Credit Cards Market Report 2021
2021-12-15T03:07:22+00:00
OX1050063
2195
146281
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Report
en_GB
“The COVID-19 pandemic has impacted the credit card market, as reduced spending opportunities and increased savings have limited credit card use and the need for borrowing. Consumers will continue to…

UK Credit Cards Market Report 2021

£ 2,195 (Excl.Tax)

Description

The UK Credit Cards market report identifies consumer attitudes towards market performance, credit cards market research, credit cards market analysis, launch activity and barriers to credit card ownership in the UK. This market report covers the market size, market forecast, market segmentation and Credit Cards industry trends in the UK. 

Current Market Landscape

Online shopping is increasingly driving credit-card use and ownership. People have become more accustomed to online shopping in the pandemic and have experienced a convenient, easy-to-use and time-effective way of making purchases. This has encouraged more adults across all age groups to use credit cards to spend online and this trend will continue as online sales remain well above pre-pandemic levels.

  • After years of growth, gross credit card lending plummeted by almost 21% in 2020.
  • 40% of cardholders say they have a credit card to make purchases online, which is up by five percentage points compared to 2019.
  • Gross credit card lending has shown some initial signs of growth and is expected to reach around £177.5bn in 2021 – a 4.1% increase on 2020.
  • For instance, the value of credit card transactions rose by 30% in June 2021, compared with the previous year.

Credit card lending has partially recovered after declining sharply due to the pandemic in 2020. As the economy has reopened and life for many has returned to near-normal in the second half of 2021, consumers have more spending and borrowing opportunities. However, many will continue to be cautious as the cost of living rises and household budgets are squeezed, while savings acquired during the pandemic will limit credit card usage and borrowing.

Future Market Trends in Credit Cards 

Credit cards face growing competition from buy now pay later (BNPL) products. The use of BNPL products has increased significantly, especially among younger consumers. The success of these products has encouraged a multitude of companies, including some of the biggest payment providers to enter the market, ramping up competition with credit cards.

Younger credit-card holders expect to have convenient and easy-to-use tools and apps to manage their credit cards and make their lives easier. By developing these features, providers have an opportunity to increase engagement with their customers, as well as offering more flexibility and help to stay in control of their spending. This would increase the relevance of credit cards among younger people who are turning to BNPL products and those who have concerns about the impact of borrowing on their credit profile.

Read on to discover more details or take a look at all of our UK Finances market research.

Quickly understand

  • Market performance, including the impact of COVID-19 and a five-year market forecast.
  • An analysis of competitive strategies and launch activity.
  • Brand research on selected credit card brands.
  • Ownership and reasons for having a credit card.
  • Barriers to credit card ownership.
  • What credit card features appeal to consumers.

Covered in this report

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

Expert analysis from a specialist in the field

This report, written by Stefania Apostol, a leading analyst in the Financial Services sector, delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

The COVID-19 pandemic has impacted the credit card market, as reduced spending opportunities and increased savings have limited credit card use and the need for borrowing. Consumers will continue to remain wary about debt and limit credit card borrowing as the cost of living rises and household budgets are squeezed. However, the increase in the online use of credit cards represents an opportunity for providers who can improve trust by actively communicating their security measures and develop a proposition that rivals the convenience of BNPL.
Stefania Apostol - Financial Services AnalystStefania Apostol
Financial Services Analyst

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, 2021
    • The market
    • Credit card lending has partially recovered
      • Figure 2: Gross credit card lending (not seasonally adjusted), 2015-21
    • Gross credit card lending is expected to grow steadily over the next five years
      • Figure 3: COVID-19 scenario forecasts for gross credit card lending (not seasonally adjusted), 2016-26
    • Lockdown restrictions negatively impacted credit card transactions
      • Figure 4: Value of card transactions in the UK, 2019-21
    • Financial wellbeing and confidence hold up during pandemic
    • Companies and brands
    • Barclaycard remains the leading credit card provider…
    • …and Amazon share is growing
      • Figure 5: Credit card providers, by total credit card ownership, 2021
    • Credit cards are facing increased competition
    • Providers are focusing on digital transformation
    • Barclaycard is the most used and trusted brand
      • Figure 6: Attitudes towards and usage of selected brands operating in the credit card market, 2021
    • The consumer
    • Ownership of credit cards remains stable
      • Figure 7: Credit card ownership, 2019-21
    • The majority of cardholders pay their balance in full
      • Figure 8: Repayment habits, 2021
    • Non-cardholders have a strong preference for debit cards…
    • …while a significant minority are concerned about interest rates
      • Figure 9: Barriers to credit card ownership, 2021
    • Online shopping is the main driver of credit card use…
    • …closely followed by paying for large purchases
      • Figure 10: Motivations for owning a credit card, 2019-21
    • Cardholders want easy access to their transaction history…
    • …and apps to manage their credit cards
      • Figure 11: Interest in credit card features, 2021
  3. Issues and Insights

    • The pandemic has limited credit card use but consumers haven’t abandoned their cards… yet
    • Younger cardholders expect convenient and interactive tools to manage their credit cards
  4. Market Size and Performance

    • Impact of COVID-19 on credit cards
      • Figure 12: Short-, medium- and long-term impact of COVID-19 on credit cards, 2021
    • Credit card lending has started to recover from pandemic drop
      • Figure 13: Gross and net credit card lending (not seasonally adjusted), 2015-21
  5. Market Forecast

    • Gross credit card lending expected to return to growth
      • Figure 14: Forecast for gross credit card lending (not seasonally adjusted), 2016-26
      • Figure 15: Forecast for gross credit card lending (not seasonally adjusted), 2016-26
    • Market drivers and assumptions
      • Figure 16: Key drivers affecting Mintel’s market forecast, 2015-25
    • Forecast methodology
  6. COVID-19 Scenario Performance

    • Mintel’s approach to predicting the impact of COVID-19
    • Fundamental differences in how COVID-19 is affecting consumer markets
    • COVID-19 scenario forecast for credit cards
    • The market will see stronger growth in a rapid recovery scenario
    • An extended period of disruption will reduce growth
      • Figure 17: COVID-19 scenario forecasts for gross credit card lending (not seasonally adjusted), 2016-26
    • COVID-19 market disruption: risks and outcomes
      • Figure 18: Summary of Mintel scenario expectations and the impact on credit cards, 2021
  7. Market Environment

    • Credit card payments decreased by 18% in 2020
      • Figure 19: Payment volumes, 2016-20
    • Lockdown restrictions impacted the value of card transactions…
      • Figure 20: Value of card transactions in the UK, 2019-21
    • …and the volume
      • Figure 21: Volume of card transactions in the UK, 2019-21
    • 87% of credit cards are contactless
      • Figure 22: Payment cards with contactless functionality, 2018-21
  8. Market Drivers

    • Gross unsecured lending starts to recover
      • Figure 23: Gross consumer lending, by credit card and other unsecured lending (not seasonally adjusted), 2015-21
    • Credit card interest rates likely to increase
      • Figure 24: Consumer credit rates, 2016-21
    • Financial wellbeing has held up…
      • Figure 25: Financial Wellbeing Index, 2019-21
    • …but confidence has been shaken by disruption and price rises in late 2021
      • Figure 26: Financial Confidence Index, 2019-21
    • Saving activity remains high
      • Figure 27: Trends in savings, 2019-21
    • Online sales remain above pre-pandemic levels
      • Figure 28: Estimated share of all non-food sales, by stores and non-store retail, 2020-21
    • Spending on debit and credit cards has partially recovered
      • Figure 29: Value of CHAPS payments received by large UK corporates from their credit and debit card processors, by category, 2020-21
  9. Regulatory and Legislative Changes

    • FCA published its review into the unsecured credit market
    • Contactless payments rise to £100
    • FCA delays Strong Customer Authentication again
    • Visa and Mastercard to raise interchange fees
    • Payment deferral scheme ends
  10. Market Share

    • Barclaycard remains the leading credit card provider
      • Figure 30: Credit card providers, by total credit card ownership, 2019-21
    • Amazon makes inroads into the credit card market
      • Figure 31: Credit card providers, by single and multiple credit card ownership, 2021
  11. Competitive Strategies

    • Open banking is changing the payments landscape
    • Credit cards face increased competition from BNPL products
    • Klarna expands its reach
    • New entrants to BNPL…
    • …while more banks are launching instalment plans
    • Digital developments continue…
    • …and the banking arms of retailers focus on consumer experience
    • Providers are switching to sustainable cards
    • Tackling fraud and security issues
  12. Launch Activity and Innovation

    • Personalised cashback on credit cards
    • Airmiles credit cards adapt to pandemic-related uncertainty
    • New credit card providers
    • Zopa launches a credit card
    • NewDay introduces digital-only credit card
    • Keebo offers bespoke credit
  13. Advertising and Marketing Activity

    • Credit card adspend continues to decrease
      • Figure 32: Total above-the-line, online display and direct mail advertising expenditure on credit and charge cards, 2016/17-2020/21
    • Barclaycard remains the larger spender
    • Capital One launches the “Credit Done Right” advert
    • Vanquis aims to help customers “walk tall”
    • American Express highlights the benefits of card ownership
      • Figure 33: Top 10 above-the-line, online display and direct mail advertisers of credit and charge cards, 2018/19-2020/21
    • Direct mail loses favour among credit card providers
      • Figure 34: Total above-the-line, online display and direct mail advertising expenditure on credit and charge cards, by media type, 2016/17-2020/21
    • Nielsen Ad Intel coverage
  14. Brand Research

    • Brand map
      • Figure 35: Attitudes towards and usage of selected brands operating in the credit card market, 2021
    • Key brand metrics
      • Figure 36: Key metrics for selected brands, 2021
    • Brand attitudes: Barclaycard stands out for having a good reputation
      • Figure 37: Attitudes, by brand, 2021
    • Brand personality: Virgin Money is perceived as a fun brand
      • Figure 38: Brand personality – Macro image, 2021
    • NatWest is seen as reassuring and reliable
      • Figure 39: Brand personality – Micro image, 2021
    • Brand analysis
    • Sainsbury’s Bank is perceived as affordable
      • Figure 40: User profile of Sainsbury’s Bank, 2021
    • Virgin Money is considered fun and has a high level of satisfaction
      • Figure 41: User profile of Virgin Money, 2021
    • American Express has an exclusive image
      • Figure 42: User profile of American Express, 2021
    • Barclaycard is the most used and trusted brand
      • Figure 43: User profile of Barclaycard, 2021
    • Aqua lacks awareness
      • Figure 44: User profile of Aqua, 2021
    • NatWest is perceived as a reassuring brand
      • Figure 45: User profile of NatWest, 2021
    • Capital One has the highest usage of card specialists
      • Figure 46: User profile of Capital One, 2021
    • MBNA lacks differentiation
      • Figure 47: User profile of MBNA, 2021
    • Reading word clouds
  15. Credit Card Ownership

    • Ownership of credit cards remains flat
      • Figure 48: Credit card ownership, 2019-21
    • Personal credit card ownership is lower among younger age groups
      • Figure 49: Personal credit card ownership, by age groups, 2021
    • 46% of cardholders have more than one credit card
      • Figure 50: Number of credit cards owned, 2021
  16. Barriers to Credit Card Ownership

    • Non-credit cardholders rely on debit cards and worry about debt
      • Figure 51: Barriers to credit card ownership, 2021
    • Concerns about interest rates likely to increase in next few months
    • Younger non-cardholders are more concerned about damaging their credit score
  17. Motivations for Owning a Credit Card

    • Most cardholders have a credit card to use it online
    • Improving a credit score is a key driver among under-35s
      • Figure 52: Motivations for owning a credit card, 2019-21
    • 37% of cardholders use credit cards for large purchases
    • Extra protection for purchases is more relevant for older cardholders
    • Credit cards could be used to improve financial wellbeing
      • Figure 53: Motivations for owning a credit card, 2021
  18. Repayment Habits

    • The majority of cardholders pay the balance in full
      • Figure 54: Repayment habits, 2021
    • Financial situation drives repayment habits
      • Figure 55: Repayment habits, by financial situation, 2021
  19. Credit Card Features

    • Cardholders want easy access to their transaction history…
    • …and apps to manage their credit cards
    • Younger cardholders want money management features
      • Figure 56: Interest in credit card features, 2021
    • Cardholders who don’t pay the balance in full are more interested in additional features
      • Figure 57: Repayment habits, by interest in selected credit card features, 2021
  20. Appendix – Data Sources, Abbreviations and Supporting Information

    • Abbreviations
    • Consumer research methodology
  21. Appendix – Central Forecast Methodology

    • Market forecast and prediction intervals
      • Figure 58: Forecast for gross credit card lending (not seasonally adjusted), 2021-26
    • Market drivers and assumptions
      • Figure 59: Key drivers affecting Mintel’s market forecast, 2020-26
    • Forecast methodology
  22. Appendix – COVID Scenario Performance Methodology and Assumptions

    • Scenario performance
      • Figure 60: COVID-19 scenario forecasts for gross credit card lending (not seasonally adjusted), 2016-26
    • Rapid COVID recovery, central and extended COVID disruption scenarios outline
    • Scenario 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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