Abstract
Overview
Credit card issuers are facing intense competitive forces in 2008: downward
pressure on fee income and interchange revenue, coupled with fallout from the
subprime meltdown and questions surrounding the overall creditworthiness of
their cardholder base. The Federal Reserve reported on January 8, 2008 that
credit card borrowing is at its highest level in six months, reflecting that
borrowers are relying more heavily on credit card debt to finance purchases
since the availability of equity loans has tightened. With growth increasing
but delinquencies expected to rise, it is imperative that issuers extract as
much efficiency and employ effective cost-saving measures for their card
portfolios. This report analyzes Javelin consumer data-segmented by various
demographics and behaviors-to provide insight that will enable issuers to
drive profitability and expand cost saving measures through enhanced targeting
of the online channel.
Primary Questions
- What percentage of consumers has a credit card and which population
segments are particularly underserved?
- How do credit cardholders apply for their cards?
- How can Issuers leverage the online channel for cost savings?
- Which consumer segments are prime targets for online channel migration?
Table of Contents
- Overview
- Primary Questions
- Findings and Analysis
- Top-of-Wallet Target: Nearly One-Fourth of US Consumers without a Credit
Card
- Issuer Strategies to Gain Primary Card Status with Younger Consumers
- Drive Application via the Online Channel among Younger Consumers
- Aggressively Target "Multi-Channel" Cardholders for Paper Turnoff
- Targets for Paper Turnoff Are already at their Issuers' Websites
- Consumers Fear thatPaperless Means Loss of Control
- Online Applications to Overtake Mail Solicitations?
- Approach Lower Income Consumers with "Spending Card" Options
- Disparity of Payment Method among Lower Income Consumers
- Appendices
- Appendix A : Gen Y Income Growth to Exceed that of Baby Boomers by 2017
- Appendix B: Younger Consumers Prefer Catalogue Rewards
- Appendix C: Efficiency and Cost Saving Opportunities by Income
- Appendix D: "Hybrid" Activity Prominent among Black and Latino
Cardholders
- Appendix E: Black and Latinos Underserved in Credit Card Arena
- Appendix F: Asian and Latino Cardholders Pay Bills at Credit Card Sites
- Methodology
- Related Research
Table of Figures
- Figure 1: Percentage of Consumers with a Credit Card by Age
- Figure 2: Credit Card Penetration among Gen Y (18-29-year-olds)
- Figure 3: Percentage of Cardholders Who Apply Online by Age
- Figure 4: Bank Credit Card Programs for Younger Adults and Students
- Figure 5: How Cardholders Receive and Review Statements by Age
- Figure 6: Consumers' Credit Card Bill Payment Behavior by Age
- Figure 7: Consumer Attitudes towards Paper Statement Turnoff (by Type of
Banker)
- Figure 8: "Primary" Credit Card Application by Income
- Figure 9: Percentage of Consumers with a Credit Card by Income
- Figure 10: Credit Card Bill Payment by Income
- Figure 11: 2007-2017 Projected Income Growth by Generation
- Figure 12: Rewards Features Currently Earned on Credit Card by Generation
- Figure 13: Credit Card Statement Receipt and Review by Income
- Figure 14: Statement Receipt and Review by Ethnicity
- Figure 15: Lack of Credit Card Possession by Ethnicity
- Figure 16: Credit Card Bill Payment by Ethnicity
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