Decision Guide: How FIs Can Identify and Attract Credit Card Outsiders

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 Outsider Personas
• Actionable Insights
• Read More
• Methodology

Credit Card Outsider Personas

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.

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.

Read More

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Methodology

“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.