One sign of the improving economy may be the revived consumer willingness to sign up for new credit cards. Over the past 12 months, nearly 20% of existing credit card consumers started shopping for a new card. comScore, which just released a new study on this topic, says the growth in demand for more credit cards will continue this year.
Sarah Lenart, comScore vice president of financial services, says “we’re also seeing a corresponding increase in retail and e‑commerce spending along with increased card shopping, especially among those in the subprime sector.” However, consumers may be more cautious about the types of credit cards they sign up for after having experienced a period of financial difficulties. In addition, about 80% of consumers with household incomes of less than $100,000 say that inflation will impact their spending this year.
comScore research indicates that the top features for consumers who are in the market for a new credit card include:
- Low APR/Interest Rate: 40%
- No annual fee: 28%
- Rewards/points: 13%
- Card acceptance at merchants: 8%
Financial services firms can only do so much when it comes to offering low interest rates or no annual fees because they must earn money on the service they are offering. In many cases, new regulations have curtailed how the types of fees they can levy and how they apply payments to outstanding balances. This year, these companies will need to compete on rewards in order to sign up new customers. Cardholders say the following features are important:
- Cash back: 57%
- Merchant rewards: 13%
- Flexible points: 13%
- Airlines: 10%
- Gas: 5%
- Charitable donations: 3%
Consumers use a variety of sources to search for credit cards, including search engines (36%), credit card website (28%), direct mail (19%) and credit card affiliate site (10%).
Financial services companies will likely be increasing their marketing this year. As they attempt to sign up new customers, they’ll be emphasizing cash back and merchant rewards.[Source: comScore Online Credit Card Report. 20 Apr. 2011. Web. 2 May 2011]