The U.S. Market for Rewards Cards, 2nd Edition
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Interesting times are ahead for the payments industry in general and for the rewards credit card industry specifically. Aside from the macro-economic issues walloping consumers, merchants and the payments industry, rewards credit card issuers have specific challenges ahead of them, including the merchant interchange rate feud, alternative payment networks and systems, card-holder retention in a mature rewards market, and increasing consumer concerns about their finances.
Those challenges aside, the U.S. market for credit cards saw robust growth during the 2003-2007 period. Purchase volume of the four main general-purpose credit card brands (Visa, MasterCard, American Express, and Discover) grew at a compound annual growth rate of 10% to top $1.9 trillion in 2007 accounting for 14% of total U.S. GDP. Driving this growth was the increased penetration of rewards programs, which Packaged Facts estimates accounted for 80% of all general-purpose credit cards issued in the United States.
Growth in rewards-based cards has been substantial for several years as issuers attract new customers with ever more flexible programs and promises of greater rewards benefits. Growth is expected to continue and rewards programs are expected to be a mandatory part of any credit card business. But, the economic and financial crisis of 2007/2008 may have a significant effect on the overall industry’s ability to grow as credit tightens and charge-off rates increase. The question is can rewards programs continue to attract new customers or will retention be the name of the game as issuers fight for share of the wallet?
This Packaged Facts report contains data and analysis on the general-purpose credit card industry in the United States with a focus on rewards-based programs and cards. The report presents the size and growth of the market and several related key metrics within the broader credit card arena, as well as trends and factors affecting the industry. In addition, the following major key competitors are profiled: American Express, Discover Financial Services, MasterCard Worldwide, Visa, Inc., Bank of America, Capital One Financial, Citigroup, JPMorgan Chase, Washington Mutual, Inc., Wells Fargo & Company, and Revolution Money.
The report also provides a focused analysis of consumer demographics and preferences of co-branded credit cards.