The latest research by Timetric finds the credit card market is showing signs of recovery, with credit cards gradually gaining traction among US consumers.
Credit cards accounted for 43.4% in terms of transaction value, a number that is expected to reach 45.4% by the end of 2019. Timetric predicts that the US will have 720.0 million credit cards in circulation by 2019 compared to 590.2 million in 2014, making it the most popular payment method after debit cards that are expected to reach 929.9 million over the next five years.
Supported by a strengthening economy and low credit card delinquency, banks have again started to focus on credit card business, adopting a more cautious approach in terms of issue. In addition to targeting consumers with high FICO scores, banks and card issuers are now also offering cards to consumers with low credit ratings.
“During the economic crisis, when job losses reached their peak with negative income growth and poor savings rates, a high number of US credit cardholders defaulted on payments, giving them a bad credit history. US banks are now offering these consumers’ credit cards with a security deposit based on the customer’s chosen credit limit. This has enabled many American consumers to regain access and trust in credit cards,” comments Timetric’s analyst Kartik Challa.
Expanding e-commerce contributes to the demand in credit cards
According to Timetric, the growing market for e-commerce in the US is one of the key factors driving the expansion of the country’s credit card market. Credit and debit cards still dominate due to promotional offers, such as discounts and coupons offered by card issuers. The benefits offered by online retailers, such as low cost and high convenience, are expected to further increase credit and debit card ownership in the US. However, online retailers and regulatory authorities should concentrate on increasing consumer confidence in the safety of online retail.
