Credit Card Trends and Usage Looking Favorable in 2018

Published: August 6, 2018 by Kerry Rivera

Consumer confidence is nearing an 18-year high. Unemployment figures are at record lows. Retail spend is healthy, and expected to stay that way through the back-to-school and holiday shopping booms.

Translation for credit card issuers? The swiping and spending continue.

In fact, credit card openings were up 4% in the first quarter of 2018 compared to the same time last year, and card utilization is hovering around 20.5%.

Even with the Fed’s gradual 2018 rate hikes, consumers are shopping.

In a new Mintel report, outstanding credit card debt is now $1.03 trillion (as of the end of Q1, 2018), and the number of consumers with credit cards is growing fastest among people aged 18 to 34. In the retail card arena specifically, boomers and Gen X’ers are leading the charge, opening 45% and 27% of new retails cards, respectively.

“A stronger economy always bodes well for credit cards,” said Kelley Motley, director of analytics for Experian. “Now is the time for card issuers to zero in on their most loyal consumers and ensure they are treating them with the right offers, rewards and premium benefits.”

Consumer data reveals the top incentives when selecting a rewards-based card includes cash back, gas rewards and retail cards (including travel rewards and airfare). In fact, for younger consumers, offering rewards has proven to be the most effective way to get them to switch from debit to credit cards.

Cash back was the most preferred reward for consumers aged 18 to 44 when asked about their motivation to apply for a new card. For individuals 45 and older, 0% interest was the top motivator.

Of course, beyond credit card opens, the ideal is to engage with the consumers who are utilizing the card the most. From a segmentation standpoint, the loyal retail cardholder has an average VantageScore® of 671 with an average total balance of $1,633. They use the card regularly and consistently make payments. Finding more loyalists is the goal and can be achieved with informed segmentation insights and targeted prescreen campaigns. On the flip side, insights can inform card issuers with data, helping them to avoid wasting marketing dollars on consumers who merely want to game a quick credit card offer and then close an account.

A batch and blast marketing approach no longer works in the credit card marketing game.

“Consumers expect you to know them and their financial needs,” said Paul DeSaulniers, senior director of Experian’s segmentation solutions. “The data exists and tells you exactly who to target and how to structure the offer – you just need to execute.”

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