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 TRENDCredit card ownership is arising trend that doesn’tappear to be disappearinganytime soon. In 2000 therewere 159 million creditcardholders in the UnitedStates , 173 million in2006, and that number isexpected to grow to 222million Americans by2012.(U.S. CensusBureau)Furthermore 84% ofthe student populationoverall have credit cards.This is a huge increase ofapproximately 11 percentsince the fall of 2004.
LARGE COMPANIES TARGETING STUDENTSCredit card companies aim attargeting university students,as they have lessresponsibilities and a largeamount of debt. In fact in 2011only 2 percent ofundergraduates have no credithistory. Additionally 41% ofcollege students have a creditcard. For these students withcards, about 65 percent paytheir bills in full every month,which is higher than thegeneral adult population. Since2004 -2011 : the number ofstudents who arrived oncampus with a credit card hasincreased from 23 percent to39 percent.
RETAIL STORE CREDIT CARDSRetail credit cards can be divided into twoforms: the private label and the in-house. Theprivate label is the dominant form in which abank runs the card program on behalf of theretailers. On the other hand the in-house creditcard is where the retailer runs its own cardprogram. A large and growing number of major U.Sretail chains aggressively advertise their ownbranded retail store credit card to improvecustomer loyalty and ultimately boost sales. Infact retail store credit cards represent thegreatest portion of cards issued, at 38.6% ofthe total. Bank credit cards follow, at 37.7% ofthe total. Although retail stores issue slightlymore credit cards than banks, bank cards areused for the main share of total purchases,representing 64.2% of the annual dollar
So…. Why would someone bother getting various retailcards when they couldjust just use their one credit card 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.
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.