The Charge to Charge CardsTheodore Iacobuzio |
For what may or may not be obvious reasons, charge cards are getting a lot of attention from issuers, and MasterCard research shows that certain consumers may be ready for them.
In an environment characterized by unrelenting shake-out, broad deleveraging on the part of issuers and consumers, and aggressive regulation, charge seems to be a place where issuers and consumer can come together.
Experience and research suggest proceeding carefully into what for U.S. issuers is new and unfamiliar terrain.
The first point to note is that, strictly speaking, there’s no such thing as a pure-play consumer charge card in the U.S. market today. They all have some revolve feature; it’s “pay in full” up to point, so far as consumer preference goes.
That kink suggests what research reveals to be the case: Consumers today are looking less for issuers’ imposing controls on their spending than they are looking for tools enabling their own control and flexibility. It’s a basic and important distinction.
The second key point is that consumer research reveals charge cards appeal to segments rather than across-the-broad swaths of any given portfolio. From the preceding, it isn’t too hard to guess what that segment would be: It’s the affluent.
Fully 69 percent of the affluent say they are always or usually transactors, 72 percent are looking for ways to manage their spending, and 86 percent are looking for straightforward ways to manage their finances.
MasterCard research reveals that affluent consumers who are receptive to charge offers would likely move volume from existing cards to charge. This means that issuers who have deposit relationships with these consumers have an opportunity to get in front of volume that ordinarily would go to somebody else’s credit card. The race is on.