2022
9
UK Credit Cards Market Report 2022
2022-11-04T03:07:11+00:00
OX1102601
2195
157224
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Report
en_GB
“After a decline during the pandemic, credit card lending has rebounded strongly as customers feel the impact of the cost-of-living crisis. Growth will continue as consumers seek new lines of…

UK Credit Cards Market Report 2022

£ 2,195 (Excl.Tax)

Description

The UK Credit Cards Market Report 2022 identifies consumers’ attitudes towards credit cards in the UK, the impact of the cost-of-living crisis on UK credit card spending, and opportunities for supermarket-branded credit cards. This report covers the Credit Cards in the UK market size, market forecast, market segmentation and industry trends for the UK Credit Card market.

Current Market Landscape

Inflation and the cost-of-living crisis are having a major impact on the UK credit card market and wider credit industry. More people turn to credit cards and other forms of credit, resulting in strong growth in both gross and net lending as well as UK credit card spending.

While many households, according to our credit card market study, can make cutbacks in the short term, financial resilience will be tested. This will leave some seeking additional lines of credit, or looking to interest-free promotions and balance transfers.

UK Credit Card Statistics: Market Share and Key Industry Trends

Our credit card market study shows that growth will continue to be strong but begin to stagger. As the UK begins to recover from the cost-of-living crisis, consumers will look to pay down balances. The regulation of the buy now, pay later sector will also provide more viable competition to the UK Credit Card market.

The biggest threat to the UK Credit Card market, however, will be the potential for consumers defaulting on repayments. Even those passing credit checks previously may find the cost-of-living crisis especially challenging. Unprecedented levels of inflation could see some households struggle to make ends meet. There is also the challenge from the BNPL sector. Interest-free instalments will look increasingly attractive as interest rates rise.

  • 30% of credit card holders took out their card to improve their credit rating.
  • 53% of credit card holders aged 18-34 are planning to use a balance transfer in the next year to avoid incurring interest.
  • 12% of credit card holders have a Tesco Bank credit card.

Future Trends in the UK Credit Card Market

With more people having used credit cards to navigate the rising cost of living, the market will sustain its value. Growth will ease off as competition rises and customers look to reduce debts. Credit cards will continue to play an important role across income levels as consumers aim to benefit from purchase protection, cashback deals, and other rewards.

To increase UK credit card spending and customer loyalty in the future, providers should offer additional advice to younger consumers on building their credit history and provide the resources to develop their financial education. Overall, there are strong opportunities for supermarket-branded credit cards as consumers look to make savings on the weekly shop. Offering enhanced rewards for credit card holders will increase loyalty to the brand as consumers look to maximise the power of their purchasing.

Read on to discover more details or take a look at all of our Debit and Credit Cards Market Research.

Quickly Understand

  • Market performance, the impact of the cost-of-living crisis and a five-year market forecast.
  • Credit card providers’ market share.
  • Ownership of credit cards across demographics and income groups.
  • Monthly payment activity.
  • Customer satisfaction levels with credit cards and their features.
  • Purchasing habits on credit cards.
  • Consumer attitudes towards credit cards.

Covered in this Report

Products: credit cards (pre-agreed credit, cash acquisition/withdrawal), charge card (limitless and with credit limit).

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

Expert Analysis from a Specialist in the Field

This report, written by Adrian Reynolds, a leading analyst in the Financial Services sector, delivers in-depth commentary and analysis to highlight current trends in the UK Credit Card market, and adds expert context to the numbers.

After a decline during the pandemic, credit card lending has rebounded strongly as customers feel the impact of the cost-of-living crisis. Growth will continue as consumers seek new lines of credit and access to attractive interest-free balance transfers. Use is also high amongst those in healthy financial situations, where credit cards offer a convenient payment method that can ensure purchasing produces rewards.

Adrian Reynolds
Adrian Reynolds
Senior Financial Services Analyst

Table of Contents

  1. Overview

    • Key issues covered in this Report
    • Products covered in this Report
  2. Executive Summary

    • The market
    • The rising cost of living will support strong growth in credit card use
      • Figure 1: Category outlook, 2022-27
    • Gross credit card lending will continue to grow over the next five years
      • Figure 2: Market forecast for gross credit card lending (not seasonally adjusted), 2017-27
    • Credit card payments recovered in 2021 after the COVID-19 decline
      • Figure 3: Payment volumes, by number of payments (billions), 2015-21
    • Credit cards dominate as unsecured lending grows
      • Figure 4: Gross consumer lending, by credit card and other unsecured lending (not seasonally adjusted), 2016-22
    • Companies and brands
    • Barclaycard leads an increasingly competitive market
      • Figure 5: Credit card providers, by total credit card ownership, 2020-22
    • Credit card advertising remains below pre-pandemic levels
      • Figure 6: Total above-the-line, online display and direct mail advertising expenditure on credit and charge cards, 2017/18-2021/22
    • The consumer
    • Majority of Brits have a credit card
      • Figure 7: Credit card ownership, 2022
    • Majority paying the full balance reflects use for rewards
      • Figure 8: Monthly payment activity, 2022
    • Prioritise improving credit card rewards
    • Ensure customer service innovation maintains pace with retail banks
      • Figure 9: Key drivers of overall satisfaction with main credit card, 2022
    • Supermarket credit cards are well placed to grow
      • Figure 10: Credit card purchasing, 2022
    • Interest from younger consumers points to market growth
      • Figure 11: Intent to apply for credit cards, by age, 2022
    • Help young customers boost credit ratings with tailored cards
      • Figure 12: Attitudes towards credit cards, 2022
  3. Issues and Insights

    • Credit card lending will surge through the cost-of-living crisis but rewards remain vital
    • Supermarket credit cards are well placed to grow as consumers seek rewards on everyday essentials
    • Help young consumers build credit ratings and boost financial education
  4. Market Size and Performance

    • Credit card lending has surpassed pre-pandemic levels
    • Net lending growing rapidly after COVID-19 repayments
      • Figure 13: Gross and net credit card lending (not seasonally adjusted), 2016-22
  5. Market Forecast

    • The five-year outlook for credit cards
      • Figure 14: Category outlook, 2022-27
    • Gross credit card lending will continue to grow over the next five years
      • Figure 15: Market forecast for gross credit card lending (not seasonally adjusted), 2017-27
      • Figure 16: Market forecast for gross credit card lending (not seasonally adjusted), 2017-27
    • Forecast methodology
    • Learnings from the last income squeeze
      • Figure 17: Gross and net credit card lending to individuals, 2007-12
  6. Market Environment

    • Credit cards are the third most common weekly payment method
      • Figure 18: Payment method frequency, 2021
    • Credit card payments recovered in 2021 after the COVID-19 decline
      • Figure 19: Payment volumes, by number of payments (billions), 2015-21
    • Value of credit card transactions is rising in 2022
      • Figure 20: Value of card transactions in the UK, 2019-22
    • Number of credit card transactions at highest point since December 2019
      • Figure 21: Volume of card transactions in the UK, 2019-22
    • Total credit card debt has grown in the first five months of 2022
      • Figure 22: Credit card usage, 2021-22
  7. Market Drivers

    • Credit cards dominate as unsecured lending grows
      • Figure 23: Gross consumer lending, by credit card and other unsecured lending (not seasonally adjusted), 2016-22
    • Rising interest rates for overdrafts have driven the credit card market
      • Figure 24: Consumer credit rates, 2017-22
    • Record levels of inflation leave many consumers turning to credit
      • Figure 25: CPI and CPIH inflation, 2019-22
    • Rising base rate could make credit cards more expensive
      • Figure 26: Bank of England base rate, end of month, 2017-22
    • Consumer financial confidence is in decline
      • Figure 27: Consumer financial sentiment, 2021 and 2022
  8. Regulatory and Legislative Changes

    • Bank of England continues to raise interest rates
    • Government sets energy price cap at £2,500
    • FCA reinforces the need for cost-of-living support
    • The FCA’s Consumer Duty could have implications for credit card providers
    • Regulation of the BNPL sector expected by mid-2023
  9. Market Share

    • Barclaycard leads an increasingly competitive market
      • Figure 28: Credit card providers, by total credit card ownership, 2020-22
    • Amazon’s share of multiple card market could stall as cards are withdrawn
      • Figure 29: Credit card providers, by total credit card ownership, 2022
  10. Competitive Strategies and Launch Activity

    • Interest rates rise in response to the base rate
    • Barclays launches two new Avios earning credit cards
    • Sainsbury’s reduces Nectar points earned on credit cards
    • Providers look to sustainability with recycled credit cards
    • NewDay launches first entirely digital credit card in the UK
    • MasterCard increases efforts to help customers with visual impairments
    • Competition from the BNPL sector grows as companies expand offline
    • Klarna launches BNPL credit card
    • Laybuy and Clearpay release virtual cards to boost in-store usage
    • Santander is quick to follow with the launch of Zinia
  11. Advertising and Marketing Activity

    • Credit card advertising remains below pre-pandemic levels
      • Figure 30: Total above-the-line, online display and direct mail advertising expenditure on credit and charge cards, 2017/18-2021/22
    • Leading advertiser Amex focused on highlighting cashback rewards
    • Experian advert looks to encourage credit card research
    • Capital One follows “One good thing” campaign with pop-up café
      • Figure 31: Top 10 above-the-line, online display and direct mail advertisers of credit and charge cards, 2019/20-2021/22
      • Figure 32: Total above-the-line, online display and direct mail advertising expenditure on credit and charge cards, by media type, 2017/18-2021/22
    • TV continues to be the preferred advertising medium for credit cards
    • Nielsen Ad Intel coverage
  12. Credit Card Ownership

    • Majority of Brits have a credit card
    • Credit cards can help consumers benefit from their purchasing
      • Figure 33: Credit card ownership, 2022
    • Younger consumers need convincing over the benefits of credit cards
      • Figure 34: Personal credit card ownership, by age, 2022
    • Multiple card ownership could grow as customers seek balance transfers
      • Figure 35: Number of credit cards owned, 2022
    • Use tailored rewards to motivate young consumers
      • Figure 36: Number of credit cards owned, by age, 2022
  13. Monthly Payment Activity

    • Majority paying the full balance reflects use for rewards
      • Figure 37: Monthly payment activity, 2022
    • Financial situation is closely linked to repayment habits
    • Age disparity reflects higher average earnings
      • Figure 38: Monthly payment activity, by age, 2022
  14. Credit Card Satisfaction Levels

    • Satisfaction is very high but could be tested by the cost-of-living crisis
      • Figure 39: Overall satisfaction levels with main credit card, 2022
    • Widespread acceptability is driving satisfaction…
    • …but interest rates are an issue for some consumers
    • Prioritise rewards for regular purchasing to attract more young consumers
    • Mobile app lags behind websites for customer satisfaction
      • Figure 40: Satisfaction with credit card, by factors, 2022
  15. Key Driver Analysis for Credit Cards

    • Rising interest rates could limit growth
      • Figure 41: Key drivers of overall satisfaction with main credit card, 2022
    • Prioritise improving credit card rewards
    • Ensure customer service innovation maintains pace with retail banks
  16. Credit Card Purchasing

    • Supermarket credit cards are well placed to grow
      • Figure 42: Credit card purchasing, 2022
    • Younger customers may turn to credit cards to cover rent
      • Figure 43: Paying rent/mortgage on credit cards, by age, 2022
    • Offer cashback on household bills paid with credit cards
      • Figure 44: Paying household bills on credit cards, by age, 2022
    • Make travel rewards more relevant to younger consumers
      • Figure 45: Credit card purchasing on travel and leisure, by age, 2022
    • Preference for rewards cards sees wider purchasing amongst older consumers
      • Figure 46: Repertoire of credit card purchasing, by age, 2022
  17. Attitudes towards Credit Cards

    • Interest from younger consumers points to market growth
      • Figure 47: Intention to apply for credit cards, by age, 2022
    • There are opportunities to expand rewards using financial data
    • Help young customers boost credit ratings with tailored cards
    • Younger customers are seeking balance transfers for the year ahead
      • Figure 48: Attitudes towards credit cards, 2022
  18. Appendix – Data Sources, Abbreviations and Supporting Information

    • Abbreviations
    • Consumer research methodology
  19. Appendix – Key Driver Analysis

    • Methodology
    • Interpretation of results
      • Figure 49: Overall satisfaction with main credit card – key driver output, 2022
  20. Appendix – Market Size and Forecast

      • Figure 50: Market size and forecast for gross credit card lending, 2022-27
    • Forecast 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.

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*databooks not available with UK B2B Industry reports.

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