Decision Guide: How FIs Can Identify and Attract Credit Card Outsiders
September 2024
Roughly 53 million U.S. consumers do not have a credit card. The decision guide explores four distinct personas of these credit card outsiders and their potential interest in reentering the credit market.
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This decision guide details important characteristics of the 53 million U.S. consumers who do not have a credit card. PYMNTS Intelligence calls these consumers credit card outsiders. The name only describes their current attitude, however. In fact, many outsiders may need or want to apply for a card in the future. Furthermore, many of these individuals once had a credit card but closed their account over financial difficulties. We explore how entering or reentering the credit ecosystem can help credit outsiders manage their finances better and reach their goals.
This guide will help financial institutions (FIs) identify:
The differences between the four types of credit outsiders
Which outsiders show interest in getting credit cards in the future
The reasons some of these consumers show interest in getting credit cards
Whether credit outsiders see credit as a useful option to help them reach their goals
How offering tailored solutions, such as secured credit cards, can provide these consumers with a second chance
To effectively engage credit card outsiders and offer them suitable financial products, FIs must grasp the distinct characteristics and desires of each persona.
“Decision Guide: How FIs Can Identify and Attract Credit Outsiders,” a PYMNTS Intelligence and Atelio collaboration, draws on a survey of 2,630 U.S. consumers, conducted from March 13 to April 2. This brief examines credit card outsiders’ perspectives on credit cards, the opportunities FIs have to convert these consumers and best practices for doing so.
Credit card outsiders fall into four distinct groups based on their past experiences and future intentions regarding credit.
PYMNTS Intelligence’s research finds that credit card outsiders fit into four personas. The share of consumers in each persona is roughly equal, and each represents roughly 13 million U.S. consumers. These personas reveal not only outsiders’ varying demographics but also their different levels of interest in entering the credit market.
Second chancers:
These individuals previously had a credit card and are interested in obtaining one again.
Demographics at a glance:
• More likely to be higher-income individuals who have encountered financial difficulties in the past
Motivations:
• 56% are interested in credit cards in case of emergencies
• 44% are interested in credit cards to improve their credit scores or manage larger purchases
Credit curious:
These individuals have never had a credit card but are interested in getting one.
Demographics at a glance:
• Likely to be younger consumers looking to build their credit history and leverage card benefits
Motivations:
• 49% are interested in credit for emergencies
• 48% focus on building their credit scores
• Other reasons for interest include paying purchases off over time and earning rewards
Gone for Goods:
These individuals used to have a credit card but are no longer interested in having one.
Demographics at a glance:
• More likely to be baby boomers or seniors who have been burned by past credit experiences
Motivations:
• 18% cite monthly bills as an expense that makes them want to have a credit card
Never-nevers:
These individuals have never had a credit card and have no interest in obtaining one.
Demographics at a glance:
• Often low-income individuals who prefer to avoid debt altogether
Motivations:
• 42% are concerned about high interest rates and/or annual fees, with 21% citing this as the biggest factor in not wanting a credit card
Actionable Insights
Many second chancers and credit curious already see the value of traditional and secured credit cards.
Some outsiders believe that cards will play an important role in their lives. In fact, 59% of credit curious and second chancers believe a card would become their main payment method. Surprisingly, around 1 in 5 gone for goods and never-nevers say the same. In addition, many outsiders are concerned about their credit scores and would like to raise them.
Secured credit cards offer a structured way to rebuild credit while providing a safety net during emergencies. The credit curious and second chancers express strong interest in secured cards, viewing them as a safe entry point to the credit market. This product can act as training wheels, providing a manageable introduction or reintroduction to credit use.
PYMNTS Intelligence finds that among these outsiders, the job of selling secure cards’ benefits is nearly done. FIs should leverage these facts to attract second chancers and the credit curious.
Trust is paramount, and FIs have an opportunity to convert credit card outsiders.
Which FIs consumers would trust when choosing a secured card is an important question. One-quarter of all credit card outsiders interested in getting a secured card would trust the same FI at which they hold their primary accounts. This is the most preferred FI source among all four outsider groups, including the second chancers and credit curious. FIs can target their secured card offers if they understand which of their consumers fit which persona.
FIs that can win credit outsiders’ trust may be more likely to convert these consumers. Offering tools for managing risk could ease trust issues. These tools could help attract the 46% of higher-income and 39% of college-educated consumers interested in secured cards. Offering tools that help consumers reach their financial goals could also help FIs win consumers’ trust.
For second chancers, access to credit for emergencies is crucial.
More than half of second chancers show interest in credit primarily for emergencies. Many have faced financial difficulties and unexpected expenses in the past year. Moreover, 44% seek credit to improve their credit scores, and 38% value the cash cushion credit provides.
Promoting secured cards as a reliable financial safety net that addresses emergency needs is one strategy FIs should consider. FIs should also describe how secured cards can support broader financial goals like credit improvement and managing larger expenses.
Credit curious consumers are the outsiders most interested in building their credit scores.
Nearly half of credit curious consumers say a focus on building their credit scores is a reason for getting a credit card. This share reaches 50% among those interested in obtaining a secured card. These consumers show a forward-looking approach, prioritizing their financial health and future. These consumers also express interest in using secured cards to help them pay for purchases over time (40%), make larger purchases (39%) and earn discounts and rewards (36%).
Promoting secured credit cards as tools for building a strong credit foundation is important for attracting the credit curious. In addition, FIs should emphasize how these tools provide financial flexibility among other benefits.
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“Decision Guide: How FIs Can Identify and Attract Credit Outsiders,” a PYMNTS Intelligence and Atelio collaboration, is based on a survey of 2,630 U.S. consumers conducted from March 13 to April 2. The survey sought to understand consumers who do not have credit cards, how not having access to credit cards impacts their financial lifestyles and in which credit products, if any, they would be interested. The sample was balanced to match the U.S. population in a number of key variables.
About
FIS is a financial technology company providing solutions to financial institutions, businesses and developers. We unlock financial technology that underpins the world’s financial system. Our people are dedicated to advancing the way the world pays, banks and invests, by helping our clients confidently run, grow and protect their businesses. Our expertise comes from decades of experience helping financial institutions and businesses adapt to meet the needs of their customers by harnessing the power that comes when reliability meets innovation in financial technology. Headquartered in Jacksonville, Florida, FIS is a member of the Fortune 500® and the Standard & Poor’s 500® Index.
Atelio by FIS is an innovative FinTech platform that provides the building blocks for financial institutions,
businesses and software developers to embed financial services into their offerings.
To learn more, visit www.atelio.com. Follow Atelio on LinkedIn and X (@AteliobyFIS)
PYMNTS Intelligence is a leading global data and analytics platform that uses proprietary data and methods to provide actionable insights on what’s now and what’s next in payments, commerce and the digital economy. Its team of data scientists include leading economists, econometricians, survey experts, financial analysts and marketing scientists with deep experience in the application of data to the issues that define the future of the digital transformation of the global economy. This multilingual team has conducted original data collection and analysis in more than three dozen global markets for some of the world’s leading publicly traded and privately held firms.
The PYMNTS Intelligence team that produced this report:
Scott Murray: SVP and Head of Analytics
Aitor Ortiz: Managing Director
Lauren Chojnacki, PhD: Senior Analyst
Adam Putz, PhD: Senior Writer
Matthew Koslowski: Content Editor
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