The premium credit card market has always focused on “transactors”—low risk (often affluent) consumers who consistently pay off their balance in full every month and generate revenue through high utilization. As a recent article on the Financial Brand points out, this segment of consumers may be on the rise:
“Post-recession, American consumers are working to rid themselves of credit card debt and are more cautious as a result of increases in unemployment, foreclosures, bankruptcy, and a decrease in home equity.
According to a Federal Reserve study, the number of families with credit card debt decreased from 25% in 2010 to 18% in 2013. According to a 2014 survey from the National Foundation for Credit Counseling, only about one in three U.S. adults say their household has revolving balances, down from 44% in 2009.”
Given this shift in consumer behavior, issuers would be well served to revist their premium card products (and associated rewards programs) to ensure they are well positioned to compete for these customers. This is especially true when you consider that the mass affluent segement frequently targeted for premium card products is not only a low risk for default, but also less expensive to service as they tend to prefer self-service channels (online, mobile, ATM) according to Mercator Advisory Group research.
Overview by Alex Johnson, Sr. Analyst, Credit Advisory Service at Mercator Advisory group
Read the full story
