Although the recession caused by COVID-19 has had a sizable impact on credit spending, we’ve already started to see a rebound. In the third quarter of 2020, Visa reported a 18% increase in U.S. credit volume after dropping by nearly the same amount in the second quarter.
And while Buy Now, Pay Later options have surged in popularity, the basic functionality of credit cards still holds value — they provide flexibility to purchase without the need for funds on hand, there is no shortage of options to choose from, and rewards can be earned for spending.
However, consumers’ expectations of their credit cards are changing. Marqeta recently surveyed 2,400 U.S. and U.K. consumers on their current perspectives around credit cards. In 2021, we will dig deep into the results, but a few key trends are already emerging:
Consumers don’t solely rely on their bank for a credit card
In the past, a consumer would typically apply for a credit card at the same bank that held their checking account. The top 10 credit card issuers are all traditional banks that have been around for decades. Today, consumers are more comfortable adopting credit cards from alternative banking sources. This is creating opportunities for new entrants and non-financial companies to reinvent the credit card experience.
- 64% of respondents said they would apply for a credit card from a non-traditional financial institution
- When asked how they would have responded 12 months ago, only 55% of consumers said they would apply for a credit card from a non-traditional financial institution
Quality over quantity is the new paradigm for rewards
COVID-19 has proven that consumers require more flexibility in how they can earn and redeem rewards. When travel, dining, and entertainment plummeted due to public health restrictions, so did cardholders’ ability to earn rewards and credit cards didn’t keep up. For consumers, 3% cashback on hotels may not mean much if you aren’t going on vacation in the foreseeable future.
- 50% of respondents say their primary credit card provider hasn’t changed their rewards structure during COVID-19
- 27% of respondents say they have redeemed fewer rewards during COVID-19
Younger audiences expect their credit cards to do a lot more than just provide credit
Millenials don’t see their cards as just another method to make purchases, they see them as a tool to help build healthy financial lives. Features that help build credit history and provide insights to make smarter spending decisions are all in favor with younger audiences.
- 51% of Millennials said they find it difficult to track their expenses each month, but only 21% of Gen X respondents said they have trouble tracking their expenses
- 71% of Millennials said they would like their credit card provider to provide notifications to help them keep to their budget, but only 52% of Gen X respondents wanted budget notifications
The good news: Marqeta is reinventing credit cards
Knowing consumer expectations of credit are always evolving, Marqeta has been working to enhance its platform so that financial innovators can launch new, customized credit card products that meet the unique needs of their users. Old credit is out, modern credit is in.
Learn more about how Marqeta plans to reinvent the way credit cards are brought to market.