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Credit Card retailing Industry Then now and the future
Did you know?• 20.8 is the median age at which a U.S. consumer under 35 first gota credit card .• 40.6 years is the median age for credit card adoption for a consumer over the age of 65.• Approximately 60 % of consumers have a rewards credit card.• Worldwide, consumers carry more than 1 billion Visa cards Additionally more than 450 million of those cards are in the United States.
Credit card ownership is a rising trend•Credit card ownership is arising trend that doesn’t appearto be disappearing anytimesoon. In 2000 therewere 159 million creditcardholders in the UnitedStates , 173 million in2006, and that number isexpected to grow to 222 millionAmericans by 2012.(U.S.Census Bureau)Furthermore84% of the student populationoverall have credit cards. Thisis a huge increase ofapproximately 11 percent sincethe fall of 2004.
Large companies Targeting students•Credit card companies aim attargeting university students, asthey have less responsibilitiesand a large amount of debt. Infact in 2011 only 2 percent ofundergraduates have no credithistory. Additionally 41% ofcollege students have a creditcard. For these students withcards, about 65 percent pay theirbills in full every month, which ishigher than the general adultpopulation. Since 2004 -2011 :the number of students whoarrived on campus with a creditcard has increased from 23percent to 39 percent.
Retail Store Credit Cards Retail credit cards can be divided into two forms: the private label and the in-house. The private label is the dominant form in which a bank runs the card program on behalf of the retailers. On the other hand the in-house credit card is where the retailer runs its own card program. A large and growing number of major U.S retail chains aggressively advertise their own branded retail store credit card to improve customer loyalty and ultimately boost sales. In fact retail store credit cards represent the greatest portion of cards issued, at 38.6% of the total. Bank credit cards follow, at 37.7% of the total. Although retail stores issue slightly more credit cards than banks, bank cards are used for the main share of total purchases, representing 64.2% of the annual dollar volume.
• So…. Why wouldsomeone bother getting various retail cards when they could justjust use their one creditcard for all purchases?
Incentives for using retail credit cards• Lifetime memberships with the store therefore better treatment• Discounts off selected purchases• Complimentary shipping• Special offers and promotions• No interest or decreased interest for relevant stores• No annual fees• Manage accounts online• Returns without receipts• Special customer care and attention
Sounds pretty good. So what is to stop people making all their purchases using in store credit cards?
Cons for using in store credit cards• Retail credit cards can lead to lower credit scores: If you don’t use your credit card a lot, it is entered into the system as a credit inquiry. Multiple credit inquires in a credit report can trim a credit score therefore making it harder to get a loan.• Retail credit cards are in superior to credit cards due to the low loan rate. People can get very high credit card limits each month and therefore a retail credit store limit could be insufficient. It is clear that the nation has a problem with lending too much money they can not pay back. Therefore people may not be enticed by retail credit stores.
Cons continued• Inconvenience: The average American person has 3.2 credit cards. This is already a large number to have in a wallet, therefore carrying around a range of retail credit cards could become annoying and inconvenient.• Bankruptcy: Chain store failures are a growing concern for cardholders amid a retail environment where big, brand-name stores are going completely bankrupt.
Financials• Credit Card Top Companies Market Share
Combining the Big Four: Bank of America, Citi, JPM andDiscover shows how credit contraction has impacted the major banks.
Total Cards in Circulation 2010
Job opportunities• The credit card industry is one of the largest financing businesses in the world. Therefore many jobs have been created through the invention and rapid increase of credit cards. Jobs include: credit review manager, CEO of credit card companies, managers, employees of any one of the top banks, financial relations and a lot more. Jobs are created at every point of the process of getting a credit card.• In 2010 Forbes estimated at the credit card industry created over 300 000 jobs in America alone. Additionally it predicted that by 2015, 500 000 jobs would be added because of the credit card industry.
Conclusion• It is unlikely that retail credit cards will ever completely take over bank issues credit cards.• There are many positives and numerous negatives for joining up for a store credit card.• The future will see many more retail stores add in store credit cards to their amenities because it creates customer loyalty, brand awareness and builds a strong relationship with their customer.