The data needs to be tempered a bit because Experian acts as a credit card aggregator with their CreditMatch product, much like Credit Karma. This is not a consumer panel, which is something that Mercator Advisory Group does in its primary research, but let’s work with Experian’s credit card info for a few minutes.
The premise of the study is that consumers seem to prefer no-fee cards over rewards cards. Now, as a point of reference, I switch cards at the point of sale to maximize my credit card rewards. Nobody beats American Express’ Blue Preferred credit card when it comes to groceries. The 6% cashback pays me much more than the $95 annual fee each year.
And for gasoline or restaurants, it is hard to surpass Chase Freedom or Discover It when their quarterly bonuses rotate into those verticals. When I went to New York on business last week, I took my usual bundle of credit cards and $15 in cash (the cash was only because I knew I needed to tip along the way).
Enough about me.
Experian reports that the preference for credit cards at its site is as follows:
- No-annual fee cards; 27.8%
- Secured cards: 27%
- Rewards cards: 22.1%
- Cashback: 18.7%
- Travel cards: 4.3%
Keep in mind that this data comes from page views, not accounts booked. It would seem that some people who use aggregator sites are different than those who react to direct mail solicitations. Secured cards are a good example.
If you need a card that requires security, which the article posits “that group encompasses a significant chunk of the population, as 22% of Americans don’t have a credit score and 19.1% have a score below 600,” your mailbox is not getting bombarded with pre-approved solicitations, and a credit card aggregator site might be worth a look. (For more information on secured credit cards, see this Mercator report.)
The same thing goes with rewards cards. If you have a good FICO score, you probably get the best offers from American Express, Bank of America, Capital One, Chase, Citi, and Discover. If not, the aggregator site might be the way to go.
Either way, consumers better hurry in getting their credit card applications in. Latest data from the Federal Reserve indicates that banks are tightening their standards, as MarketWatch reports.
As we project in Mercator Advisory Group’s 2020 Credit Card Outlook, the U.S. credit card business is back being profitable, and one of the ways you maintain the momentum is good credit quality, which means tightening standards.
Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group