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Five Reasons Banks Should Serve the Secured Card Market:

By PaymentsJournal
March 18, 2020
in Credit, Truth In Data
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Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left corner of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s report – Secured Cards: Five Reasons Credit Card Issuers Should Serve This Market.

Five reasons banks should serve the Secured Card market:

  • Relatively low risk because of the collateralized credit line, good for all financial institution sizes
  1. Deposits: Increasing deposits is critical for smaller banks that can’t use asset backed securitization fro lending
  2. Address New Markets: Issuers can pursue customers beyond high FICO-scored accounts
  3. Millennials & Gen Z: Both face budgetary challenges which can be alleviated with secured cards
  4. Balance Portfolio: Balancing receivables with a range of product avoids, “one size fits all”
  5. Increase Revenue: The ability to increase “net non-interest revenue” as well as “net interest revenue”
    creates a base for cross selling

About Report

Mainstream programs add deposits and create a feeder group for general-purpose credit cards.

While most credit card issuers chase mass-affluent consumers and those with 700+ FICO Scores, a downstream secured card issuance program with a progression plan for advancing cardholders from secured to unsecured account status can be a strategic advantage.

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Tags: CreditCredit CardsSecured Credit CardTruth In Data

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