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With Consumer Credit Card Use Surging, BANKS NEED TO DO THIS

With U.S. consumers’ credit-card borrowing soaring, banks and retail private-label issuers need to target and tailor more offers to tap into that surging demand.   

Credit Card Usage Growing at Fastest Pace in a Decade 

How much faster are consumers whipping out their plastic?

92%

Nearly all respondents to a recent Wall Street Journal survey voted for credit cards as their favorite way to pay for purchases.

Source: "Plastic, Mobile Rank for Bank Customers," Wall Street Journal online reader survey, May 2016.

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A recent Federal Reserve report, found that consumer spending in the category including credit cards increased $11.1 billion, a 14.2 percent gain, marking the largest jump since 2000. (Total consumer borrowing for the period topped $29.7 billion, a 10 percent uptick that was the largest surge since November 2001, when the federal government urged Americans to spend more in the wake of the September 11 terrorist attacks.)*

Meanwhile, almost all readers responding to a recent Wall Street Journal survey, or 92 percent, voted for credit cards as one of their favorite ways to pay for purchases (readers were able to choose more than one option). Cash trailed a distant second at 34 percent, while newer methods of payment, including PayPal and mobile wallets, received 17 percent and 19 percent, respectively.

How to Capitalize on Increasing Card Usage

With U.S. companies hiring at a healthy clip, driving employment down to its current dip of 4.7 percent consumers should be more open to spending, borrowing and carrying credit card balances.

Here are some ways to help ensure your institution increases its share of that borrowing:

  • Start with Analytics and Assessments – Do you have the right analytics tools to uncover the opportunities for growth in your credit portfolio? Are you able to effectively analyze transactions to understand behaviors? If not, get the right tools in place to learn how your customers are using, or not using, your card so you can map out a better strategy.
  • Keep up with Your Customers’ Credit Worthiness – Too often the initial interest rates extended to card holders no longer reflect their actual credit worthiness as they move up the ladder of life. Adjust rates to encourage credit usage as your customers become better borrowers.
  • Create More Variety in Your Offers – One size should not fit all. Make the right offers to the right customers, whether those are credit lines to pay off debt, targeted promotions to cover tuition, or special incentives to spoil themselves with a vacation. Know the credit lifecycle of your consumers so you can make more transaction-based offers on their actual credit needs and personal wants.
  • Go Digital, or Go Home – It’s 2016. If you’re not delivering digital-enabled programs, you’re already at a disadvantage. If you’re already digital, then do more. Personalized alerts, customizable controls and real-time rewards, all via their device of choice, are just some of the bells and whistles your customers expect. And you don’t have to stop sending offers in the mail, but you do need to make digital your primary marketing channel.

These are just some of the creative programs you can implement to help spur card usage and nurture customer loyalty. 

Want to learn more?

VIEW VIDEO: "How to Grow Your Credit Portfolio."

Need more specific recommendations on how you can grow your card portfolio? Request a free briefing with one of our Credit Payments Solutions Specialists.