Upbound Group, a provider of consumer leasing services, has forged an agreement with Genesis Financial Solutions, a provider of near-prime consumer financial services, to provide credit solutions to customers in its platform of brands, including Rent-A-Center and Acima.

As part of the agreement, Genesis will serve as program manager and service a general-purpose credit card for qualified Rent-A-Center and Acima customers, as well as a second-look point-of-sale private label credit card to approve initially declined applicants for Acima’s network of retail merchant partners.

This partnership showcases the enduring value of co-brand and private label credit card products and, more specifically, the potential for second-look services to approve credit applicants who were initially declined. In a recent Auriemma study, 37% of cardholders indicated they had been declined for a credit or store card application. And of the one-fifth offered a second look offer, 76% accepted the alternative card.

With credit conditions expected to tighten at lenders across the country, second look is more valuable than ever for converting more applicants to cardholders.

Cardless, an emerging co-brand credit card provider based in San Francisco, recently announced it secured a three-year, $75 million credit facility from i80 Group. The company stated that the credit facility will enable Cardless “to fund customer receivables, growth, and continue its work with large, globally recognized brands.”

Additionally, Cardless announced that Brian Kelly, founder of The Points Guy, which tracks and ranks credit card value propositions and redemption options, is an investor and advisor.

The entry of Cardless, along with Imprint, Deserve, and Tandym, in recent years is beginning to altered the co-brand and private label credit card competitive landscape, which has been historically dominated by a set of incumbent banks, many of them household names.

Research suggests that incumbents do have significant advantage, as cardholders place a premium on their preferred banks issuing their co-brand cards. Recent Auriemma data indicates that 72% of cardholders say it is somewhat or very important for their preferred issuer to issue their ideal co-brand card.

Nonetheless, co-brand and private label credit cards are in high demand, with 36% of cardholders saying they are likely to apply for one in the next 12 months. The number rises to 56% among Millennials. If new co-brand and private label providers can offer cards for previously unserved brands and deliver valuable product innovations, they should find plenty of room to grow.

Auriemma recently published the Q1-2023 Cardbeat US report. The issue examines new card acquisition, outstanding debt, store debit and credit cards, and using rewards points with partner brands. Those interested in learning more about Auriemma’s research or about this issue should contact research@auriemma.group.

Findings include:

 

Word of mouth, third-party comparison websites, and digital channels are paramount to marketing and customer acquisition strategies.

  • Digital information sources like third-party comparison websites (91%) and social media posts (86%) are influential in deciding whether to apply for a payment card among those who used them—over half (56%-58%) ended up applying.

 

60% of cardholders say they spend multiple days considering a new credit card (38% for debit cards), and over half say the reason is because they want to compare the card to others on the market (54%) and/or do additional research on the card (53%).

  • 16% of cardholders say sign-up offers are the primary reason they applied for a credit card and 60% say they have at least a little impact on their decision.

 

Cardholders with outstanding credit card debt are strategic and intentional with their repayments—84% are paying off the balance as quickly as possible.

  • 59% of cardholders say they have an outstanding balance on their credit card(s), averaging $3,233.
  • One-fifth are not making any payments towards the balance(s) (22%) and/or are considering filing for bankruptcy (18%).

 

Tax refunds will most commonly be used to fortify savings (33%) and/or pay off outstanding debts or bills (31%).

Store card ownership has a marked impact on shopping with the brand—51% of store cardholders say their shopping with the merchant has increased since acquiring the card.

  • One-fifth (20%) say they have shopped at the store a lot more since getting their store card.

 

35% of rewards cardholders have transferred rewards to another brand at least once, and one-quarter (24%) have done so multiple times.

Expanding partnerships with brands similar to or different from the card would make over 40% of cardholders use their card more.

  • Supermarkets (85%) and gas stations (84%) are the most appealing purchase categories to be partnered with a credit card.

Survey Methodology

This Auriemma Group study was conducted online within the US by an independent field service provider on behalf of Auriemma Group (Auriemma) in February-March 2023 among 888 adult  credit cardholders. The number of interviews completed for both is sufficient to allow for statistical significance testing among sub-groups at the 95% confidence level ±5%, unless otherwise noted. The purpose of the research was not disclosed, nor did respondents know the criteria for qualifying.

 

(London, UK): Consumer expectations for future financial stability is worsening, with many looking to credit cards for support during the cost-of-living crisis. According to Auriemma Group’s latest issue of Cardbeat UK, 37% of cardholders believe their financial health will worsen in the next 6 months.

Gen Z and younger Millennials express greater optimism about their future financial health than their older counterparts despite increased levels of borrowing. Auriemma’s research found that 20% of cardholders are borrowing more to afford everything they need, rising to 32% among Gen Z and Millennials, and 33% of sub- and near-prime customers. The added strain of rising costs will likely cause these figures grow in the coming months.

“Since the start of the pandemic we have seen a resurgence in consumer spending on debit cards and a rise in transfers from savings to current accounts,” says Jaclyn Holmes, Director of Auriemma Research. “Today it appears rising inflation is furthering the strain on consumers, leading some to rely on their credit cards for essential spending.”

According to Auriemma’s latest findings, over 90% of credit cardholders anticipate rising costs of food, housing, fuel or energy bills to impact their personal finances negatively over the next 12 months. While energy prices were capped at £2,500 for 2 years beginning this month, some households may still see their bills double.

“At a time when all other costs are skyrocketing, the price cap will offer little comfort for many households,” says Holmes. “With more monthly outgoings attributed to energy bills, the pressure on credit card usage and borrowing will likely be even higher.”

But consumers aren’t the only ones bracing for impact. Issuers are also trying to assess how the cost-of-living crisis is currently impacting their cardholders and anticipate the enduring impact moving forward.

“Lenders have already begun seeing the operational impact of this change in customer behaviour,” says Louis Stevens, Director of Auriemma’s Industry Roundtables. “This comes at a time where regulatory initiatives, such as The Consumer Duty Act, are already taking up considerable time and resources.”

As issuers likely tighten risk criteria for customers seeking credit, some may turn to Prime and affluent customers for lower-risk lending opportunities. Auriemma Group will continue to monitor this space closely in upcoming Cardbeat studies and within its Customer Service Roundtable groups.

Survey Methodology

This Auriemma Research study was conducted online within the UK by an independent field service provider on behalf of Auriemma from April-May 2022, among 80o+ adult credit cardholders. The number of interviews completed on a monthly basis is sufficient to allow for statistical significance testing between sub-groups at the 95% confidence level ± 5%, unless otherwise noted. The purpose of the research was not disclosed nor did the respondents know the criteria for qualification.

About Auriemma Group

For more than 35 years, Auriemma’s mission has been to empower clients with authoritative data and actionable insights. Our team comprises recognised experts in four primary areas: operational effectiveness, consumer research, co-brand partnerships and corporate finance. Our business intelligence and advisory services give clients access to the data, expertise and tools they need to navigate an increasingly complex environment and maximise their performance. Auriemma serves the consumer financial services ecosystem from our offices in London and New York City. For more information, visit us at www.auriemma.group or call Jaclyn Holmes at +44 (0) 207 629 0075.

(London, UK) More credit cardholders ages 18-34 would prefer to use a Buy Now, Pay Later (BNPL) service than their existing credit card if faced with a need to borrow, according to Auriemma Group’s latest issue of Cardbeat UK.

BNPL popularity and usage has grown exponentially in the UK since Klarna launched in September 2016, accelerated by the pandemic and the resulting shift to online shopping. In these 5 years, firms such as Laybuy, Clear Pay and PayPal have entered the BNPL space, capitalising on the rising demand from consumers.

Auriemma Group’s latest research revealed a significant shift in borrowing preferences. Among credit cardholders, 20% would prefer to use a BNPL provider (e.g., Klarna) if they did not have enough funds available on hand, representing a 43% increase since November 2020. Meanwhile, the proportion of cardholders electing to borrow on their current credit card fell to 38%, representing a 17% decrease. The growing preference in using a BNPL product to borrow is largely attributable to older Gen Z and Millennial cardholders. Nearly three in ten (29%) say they would prefer to use BNPL when they do not have the funds to hand, compared to 25% who prefer using their credit card.

UK Neobanks are picking up on this trend, with Monzo and Curve announcing the launch of BNPL products last week, and Revolut expecting to follow suit. High Street banks such as Barclays have also expressed an interest to pursue a BNPL venture. But for the larger players bringing a product to market quickly is not easy, and with regulation coming from FCA by the end of 2022, time is of the essence.

“This shift in preference is leading some cardholders away from traditional credit solutions,” says Jaclyn Holmes, Director of Research at Auriemma Group. “Credit providers should evaluate their product sets to understand how they may need to adapt and differentiate in order to meet their customers’ evolving needs.”

Auriemma has seen credit card cancellations increase as consumers look to other payment and borrowing methods. 14% of credit cardholders have cancelled a card in the past 18 months, up from 8% in November 2020. And this proportion increases to 24% among those who have used a BNPL plan.

While BNPL has experienced significant growth, credit and debit are still the preferred payment choices. BNPL only captures 7% of total transactions while credit and debit capture far more (44% and 41%).  Issuers looking to meet growing consumer demand could integrate BNPL into new or existing credit card products, where there is interest from 43% of cardholders.

“As BNPL continues to grow in popularity we expect interest in credit card instalments to rise further,” says Holmes. “As we’ve seen in the US, this type of offering gives issuers a way to compete directly with BNPL providers without cannibalising their credit card portfolio.”

Survey Methodology

Cardbeat UK

This Auriemma Group study was conducted online within the UK by an independent field service provider on behalf of Auriemma in June 2021, among 800 adult credit cardholders. The number of interviews completed is sufficient to allow for statistical significance testing between sub-groups at the 95% confidence level ± 5%, unless otherwise noted. The purpose of the research was not disclosed nor did the respondents know the criteria for qualification. The average interview length was 21 minutes.

About Auriemma Group

For more than 30 years, Auriemma’s mission has been to empower clients with authoritative data and actionable insights. Our team comprises recognised experts in four primary areas: operational effectiveness, consumer research, co-brand partnerships, and corporate finance. Our business intelligence and advisory services give clients access to the data, expertise and tools they need to navigate an increasingly complex environment and maximise their performance. Auriemma serves the consumer financial services ecosystem from our offices in London and New York City. For more information, call Jaclyn Holmes at +44 (0) 207 629 0075.

(London, UK) COVID-19 has brought about many changes in consumer behaviour and issuer offerings. Auriemma Group’s 2020 Cardbeat UK Trend Report identified four areas where shifts were most prominent, highlighting the impact that the pandemic has had on the payment’s ecosystem for both financial institutions and cardholders alike.

1. New card acquisition, spend amounts and card usage have declined.

Cardholders were less engaged with their existing products and fewer sought new products compared to prior years. According to Auriemma’s research, new card acquisition dropped nearly 50%, with only 10% of UK credit cardholders in Q4-20 saying they acquired a new credit card in the past 18 months, down from 18% the same time the year prior.

“Consumers and issuers kept focus on current offerings,” says Jaclyn Holmes, Director at Auriemma Group. “During this period, issuers recognized their efforts were best spent building meaningful and productive engagement with their existing customers. For cardholders, it was critical that they got the most out of their existing products and kept on top of the various solutions that were being presented to them.”

Cardholder spend across payment methods declined from Q4-19 to Q4-20, coinciding with a drop in usage among heavy top of wallet card users. By the end of 2020, UK cardholders reported £854 in average monthly spend, down from £988 the year prior. Meanwhile, the proportion of cardholders who use their most frequently used card 20+ times in a typical month decreased over the same period (30% vs. 22%).

2. Types of rewards cards held shifted away from T&E and towards day-to-day rewards.

The impact of travel restrictions and stay-at-home guidance was felt most prominently in the T&E space. Over 2020, the types of rewards cards held shifted to align with new consumer spend patterns due to COVID-19. Ownership of supermarket co-brand (from 21% in July 2020 to 28% by November) and cash back cards (23% to 27%) rose, as co-branded airline (19% to 9%) and hotel card (5% to 2%) ownership trended down.

“While rewards card ownership shifted towards the end of 2020, and travel naturally became a lesser focus given the obvious limitations, our research found that most T&E cardholders still enjoy earning travel rewards” says Holmes. “These cardholders currently prefer redeeming their rewards for non-travel benefits, but we anticipate travel-centric redemption will bounce back as travel becomes more routine.”

Auriemma recently covered COVID-19’s impact on travel and consumer loyalty in-depth here.

3. Payment holidays became a commonplace issuer-provided relief option.

COVID-19 impacted some cardholders earning potential, leading issuers to develop payment accommodations, including payment holidays, for those unable to make their payments. Despite being a new concept to many, credit card payment holidays had strong consumer awareness by Q4-20 (94% aware), and nearly one-quarter of those offered the option took it.

Future interest was rather low (17%), signalling that the accommodation–which was intended to be a temporary, short-term solution–likely will not be missed post-pandemic. In fact, 58% of cardholders were ambivalent or would not be disappointed if payment holidays were no longer an option in the future.

“We’ve passed the March 31st deadline for cardholders to enrol in payment holidays, so issuers are now preparing for a possible increase in delinquency volume. Most cardholders aren’t expecting to rely on a future payment holiday, but there will be a group who aren’t able to jump back into their payments and will seek alternative accommodations to help make ends meet,” says Holmes.

The government has already shared guidance for such a program. Breathing Space, enacted May 4th of this year, provides a 60-day freezes on interest, fees and enforcement for people in problem debt. The program is expected to bring in £400 million in extra repayments in the first year, ultimately extending upon the improvements made with persistent debt figures throughout 2020.

Auriemma covered payment holidays and Breathing Space in greater detail here.

4. Reduced spend and focus on paying down balances led to fewer in persistent debt.

While shifting finances were a hallmark of COVID-19, reductions in spend and access to payment accommodations led some to improve their financial positions. Auriemma found that the number of cardholders in persistent debt decreased from 7% in Q4-19 to 3% by Q4-20, likely because cardholders were able to focus on paying down their balances without compounding interest slowing them down.

“COVID-19 had the potential to worsen persistent debt, but a combination of cardholder thriftiness and payment accommodations created an environment where consumers could improve their financial standing instead,” says Holmes. “However, as payment holidays come to an end and spend levels return to pre-pandemic levels, we’ll see if this change, along with the others that emerged in the shadow of COVID-19, is long-lasting or temporary.”

Survey Methodology

Cardbeat UK

This Auriemma Group study was conducted online within the UK by an independent field service provider on behalf of Auriemma in November 2020, among 845 adult credit cardholders. The number of interviews completed is sufficient to allow for statistical significance testing between sub-groups at the 95% confidence level ± 5%, unless otherwise noted. The purpose of the research was not disclosed nor did the respondents know the criteria for qualification. The average interview length was 21 minutes.

About Auriemma Group

For more than 30 years, Auriemma’s mission has been to empower clients with authoritative data and actionable insights. Our team comprises recognised experts in four primary areas: operational effectiveness, consumer research, co-brand partnerships, and corporate finance. Our business intelligence and advisory services give clients access to the data, expertise and tools they need to navigate an increasingly complex environment and maximise their performance. Auriemma serves the consumer financial services ecosystem from our offices in London and New York City. For more information, call Jaclyn Holmes at +44 (0) 207 629 0075.

(London, UK) Perceptions of loyalty points and miles redemptions has shifted in the wake of COVID-19. The lack of opportunity to travel since the beginning of COVID-19 is eroding the appeal of travel-related benefits from UK loyalty programmes. According to Auriemma’s latest research, 76% of credit cardholders enrolled in a loyalty scheme prefer to use their loyalty rewards for non-travel benefits. Meanwhile, only 35% of programme members intend to use their points or miles for travel-related benefits in 2021.

But how has this change in behaviour been impacting loyalty programmes, and how quickly, if at all, will these patterns return to previous norms?

The large volume of unused loyalty points mean high levels of financial exposure for brands on their balance sheets, which can cause a serious headache for company CFOs. Brands with loyalty programmes which are modelled heavily around offering travel redemptions, such as British Airways, Virgin Atlantic, Hilton Honors or Marriott Bonvoy, are at the highest risk in this scenario. As evidenced in April and May 2020 when Hilton Honors sold $1 billion Honors Points to American Express, and Marriot Bonvoy sold a similar $920 million points to American Express and JP Morgan Chase to build up much needed cash flow and reduce their points liability. This is only a temporary fix, however, and with travel restrictions still in place one year later, the problem of over-exposure persists for brands.

Some loyalty schemes have expanded their partnership approach to maintain member engagement and relevance. IAG Loyalty’s recent partnership with Nectar in January 2021 allows the direct  transfers of points between the two schemes providing low value redemptions to BA Executive Club members, also demonstrated with the launch of Virgin Red in November 2020 and its partnership with Greggs. Despite the apparent strengths of these partnerships, they can present poorer value to consumers which will test the theory as to how viable they are in the longer term, once travel restarts.

There remains hope as Auriemma found that 55% of consumers still enjoy earning travel rewards through their loyalty programme or credit card, many with plans to redeem these for travel-related benefits as soon as possible. With the continued effectiveness of UK’s vaccine rollout and the subsequent easing of restrictions, a return to travel could be around the corner.

“Now is the time for issuers and loyalty programmes to focus on member and cardholder engagement,” says Kate Morgan, Head of International Partnerships at Auriemma Group. “As consumer confidence in the ability to travel rises, the appeal of redeeming hard-earned points for bookings should, too. We have seen that delivering relevant, personalised offers and marketing is key, along with cancellation options that give customers the assurances they need to complete the booking process.”

While foreign holidays remain less of a certainty than domestic travel this summer, the airlines face a larger challenge than hotels who have a greater ability to turn the focus inwards on UK stays and vacations. Premier Inn owner Whitbread, UK’s largest hospitality company, is bracing for strong summer demand.  Nevertheless, as most hotel programmes exist without the cushion of commercial partnerships with non-travel-related loyalty schemes, the reopening of UK hotels might be the only opportunity for a profitable 2021.

“The nation eagerly awaits more clarity on the government’s foreign travel policy beginning on 17th May 2021,” says Kate, “and fingers crossed it is good news for the travel industry and the thousands of employees within this sector.”

Survey Methodology

Cardbeat UK

This Auriemma Group study was conducted online within the UK by an independent field service provider on behalf of Auriemma in November 2020, among 845 adult credit cardholders. The number of interviews completed is sufficient to allow for statistical significance testing between sub-groups at the 95% confidence level ± 5%, unless otherwise noted. The purpose of the research was not disclosed nor did the respondents know the criteria for qualification. The average interview length was 21 minutes.

About Auriemma Group

For more than 30 years, Auriemma’s mission has been to empower clients with authoritative data and actionable insights. Our team comprises recognised experts in four primary areas: operational effectiveness, consumer research, co-brand partnerships, and corporate finance. Our business intelligence and advisory services give clients access to the data, expertise and tools they need to navigate an increasingly complex environment and maximise their performance. Auriemma serves the consumer financial services ecosystem from our offices in London and New York City. For more information, call Kate Morgan at +44 (0) 207 629 0075.

Online Shopping Promotes Increased Debit and Credit Use, but Spend Remains Down Overall
March 10, 2021

COVID-19 has continued to have an impact on consumer spend and payment methods, albeit to a lesser extent than during the first lockdown. While spending has generally decreased overall, there are a small proportion of cardholders who have increased debit and credit usage in the past 30 days as online shopping became more prevalent. Cash usage continues to show the greatest reductions, though a bit less extreme than W2-20, likely due to channel changes and hygiene concerns.

Auriemma’s data reflects reporting in UK Finance’s latest Card Spending Update, which also shows that those spending less on cards are doing so because they are spending less in general, while those spending more have increased their online shopping.

Cardholders Are Willing to Delay Rewards Redemption for Increased Value
March 3, 2021

Issuers of T&E cards may need to refresh their value proposition to keep cardholders engaged with their card as the travel industry continues to be impacted by COVID-19. According to Auriemma’s latest research, credit cardholders are willing to wait longer to redeem their rewards if doing so would increase their point’s value. This is especially true of T&E cardholders who can redeem them for high values and may not have had the opportunity to do so in recent months.

Instalment Plan Interest Drops During Pandemic (UK)
October 2, 2020

Though there continues to be notable interest in monthly instalment plans, Auriemma’s research saw a 16 percentage point drop between W1-20 and W2-20, likely due to uncertainty around cardholder’s financial future.

With COVID-19 still threatening some cardholder’s future earning potential, many may be hesitant to commit to ongoing payments.

Cardholders Cite High Take Rates for Low or No APR Offers during the Pandemic
September 14, 2020

Though only about one-quarter of credit cardholders say they were offered 0% APR on new purchases (24%) and/or reduced APR on new purchases (22%) during the last 3 months of the COVID-19 pandemic, the observed take rates were high.

About half of those offered accepted, and many used their card more as a result—77% who accepted the 0% offer, and 66% who accepted the reduced APR offer, said they used the card more than typical after receiving the offer.

Cash Usage Drops Amid Hygiene Concerns
September 9, 2020

Cardholders Still Intend to Travel in 2020
September 4, 2020

Digital Servicing Options Going Strong During Pandemic
August 25, 2020

These Businesses May Struggle Upon Reopening—Consumers Aren’t Returning Anytime Soon
August 13, 2020

High-traffic, high-density businesses will likely struggle as business start to reopen following COVID-19 closures. Nearly half of cardholder don’t see themselves going to gyms, bars, or sporting events in the near future, and many of those who frequented various businesses prior to COVID-19 say they expect to go to those businesses less once they reopen.

Consumers Expect COVID-19 to Create a New Normal
August 11, 2020

According to Auriemma’s in-depth interviews with consumers, many anticipate a long road ahead before things return to normal, if ever.

Likelihood to Enroll in Installment Plans Increases for Some Due to COVID-19
August 7, 2020

Over one-quarter say COVID-19 has made them more likely to enroll in an installment plan and more cardholders are taking advantage of these options, particularly in-store (compared to Q4-19).

Spike in Contactless Payments Attributable to Physical Cards
August 4, 2020

Cardholders Respond Positively to Payment Accommodation Offers
July 30, 2020

Issuers have done a number of things over the course of 2020 to help cardholders through these uncertain times. About two-in-five cardholders say they were offered at least 1 of 5 tested payment accommodation in the past 6 months. And the take rate among those offered is high—most accepted the payment accommodation they were offered.

Brand Selections Flex Beyond Typical in Response to COVID-19 
July 16, 2020

According to Auriemma’s in-depth interviews with consumers, many have used different merchants, brands, and purchase channels than typical because of COVID-19.

COVID-19 Shortages Present Opportunities for New Brand and Merchant Loyalty 
July 14, 2020

COVID-19 has not only changed how consumers shop, but also where they shop. Nearly two-thirds (64%) of cardholders say they have become more willing to try new ways to shop. And 40% of recent online shoppers have tried shopping with new merchants since the COVID-19 outbreak.

Many cardholders said stores they regularly shop at were out of many items, that they needed to switch from their preferred brand to purchase an item they needed, and that they have visited stores they don’t normally shop at to find what they need.

Online Shopping Increases and Channel Preferences Shift Because of COVID-19
July 9, 2020

62% of cardholders are shopping online more than usual due to COVID-19, with some buying cleaning supplies, toiletries, and groceries for the first time via the channel as a result.

And although consumers have historically preferred in-store shopping for groceries (and most still do), a notable 31% say they prefer using digital channels (i.e., websites, mobile apps) to make grocery purchases.

UK Credit Card Issuers Are Waiving Missed Payment Fees for Most
June 10, 2020

64% of those charged a missed payment fee on their credit card had the fee waived. Few (8%) report missing credit card payments because of COVID-19, but these figures increase dramatically when looking at revolvers (16%) and sub-prime/near prime cardholders (23%).

Struggling Cardholders Struggle More Because of COVID-19
June 5, 2020

Sub-prime cardholders are more likely to report high levels of concern about their personal finances, and reasonably so. These individuals are disproportionately impacted by the COVID-19 pandemic—notably higher proportions are missing credit card, bill, or loan payments as a result.

Younger Cardholders Embrace Innovative Payments Due to COVID-19
June 1, 2020
May 29, 2020
Compared to their older counterparts, Gen Z and Millennials made more behavioral changes as a result of COVID-19. These younger credit cardholders are more likely to have:
  • Used less cash over the last 3 months
  • Used online options, contactless, and P2P instead of cash
  • Stocked up on food
  • Ordered more delivery than usual
  • Placed more online orders than usual
  • Ordered items online they would normally buy in-store
SOURCE: Auriemma Group / Cardbeat US / Q1-2020

 

(New York, NY) Second look products provide credit card applicants the opportunity to acquire a card more aligned with their financial standing, often without having to undergo another full application process.  Auriemma Group’s latest issues of Cardbeat US® and The Payments Report uncovered how likely applicants are to take these secondary offers, and how interested they would be in programs that give them suggestions on how to improve their application before reapplying.

Less than one-fifth (16%) of credit cardholders report being offered a different card than they applied for after being declined. However, the take rate for these offers is very high, with 69% of those offered accepting the second look option.

“This high acceptance rate for secondary credit products highlights the need for credit by below prime customer segments,” says Carrie Luciano, Manager of Partnerships at Auriemma Group. “Many are willing to accept an alternative credit product if they were referred by the card they initially applied for.”

Auriemma’s research also found that while familiarity was an important factor when accepting second look card offers, those who have had an application rejected in the past year may be more open to a lesser-known provider. About half of credit cardholders (48%) believe a lesser-known issuer would offer a more attractive product than a known issuer—this figure increases to 72% when looking at those who have been rejected.

“For merchants, offering an alternative second look credit product provides a means to boost topline sales and improves the otherwise negative customer experience of being declined—by facilitating credit for those who need it,” says Luciano. “Second look programs also have an ancillary benefit of acting as a credit building tool for applicants who often get rejected.”

While second look programs provide applicants with alternative offers, there is appetite for programs that help consumers improve the approval odds and reapply. The Path to Apple Card program provides this opportunity to applicants Goldman Sachs believes could meet the application requirements if the program is completed. Once the program is successfully completed, applicants are invited to reapply for the Apple Card.

Auriemma’s research found that 48% of cardholders would be interested in enrolling in a program that would help them improve their application if it led to them being reconsidered for that card after a 6-month period. Interest in such a program was driven by those with FICO scores below 670 and revolvers.

“Credit help programs, like the Path to Apple Card program, offer a way to keep applicants engaged with their desired card product, even if their application initially falls below par,” says Luciano. “While second look offers solve for an immediate credit need, credit help programs could be attractive to those willing to wait.”

Second look and credit help program offerings are on the path to ubiquity—with elements that satisfy consumer need and create opportunities for issuer engagement. Providing them as a secondary option circumvents the potentially negative rejection experience and allows applicants another opportunity to access credit, either with a new provider or with their primary option following some application improvements.

With over 30 years of experience crafting profitable, long-lasting partnerships in the Cards and Payments industry, Auriemma and a history covering second look programs, Auriemma is well suited to assist with your partnership or research needs in this area. Contact Auriemma at (+1) 646-454-4200 to learn more.

Survey Methodology

Cardbeat US

This Auriemma Group study was conducted online within the US by an independent field service provider on behalf of Auriemma Group (Auriemma) in September 2020 among 813 adult credit cardholders. The number of interviews completed for both is sufficient to allow for statistical significance testing among sub-groups at the 95% confidence level ±5%, unless otherwise noted. The purpose of the research was not disclosed, nor did respondents know the criteria for qualifying. The average interview length was 17 minutes.

The Payments Report

This Auriemma Group study was conducted online within the US by an independent field service provider on behalf of Auriemma in September 2020, among 821 adult debit cardholders. The number of interviews completed on a monthly basis is sufficient to allow for statistical significance testing between sub-groups at the 95% confidence level ± 5%, unless otherwise noted. The purpose of the research was not disclosed nor did the respondents know the criteria for qualification. The average interview length was 26 minutes.

About Auriemma Group

For more than 30 years, Auriemma’s mission has been to empower clients with authoritative data and actionable insights. Our team comprises recognized experts in four primary areas: operational effectiveness, consumer research, co-brand partnerships, and corporate finance. Our business intelligence and advisory services give clients access to the data, expertise and tools they need to navigate an increasingly complex environment and maximize their performance. Auriemma serves the consumer financial services ecosystem from our offices in New York City and London. For more information, call Jaclyn Holmes (Research) or Carrie Luciano (Partnerships) at (+1) 646-454-4200.

(New York, NY and London, UK) COVID-19 has put additional financial strain on cardholders globally, but some issuers are trying to lessen the immediate burden. Auriemma Group’s latest issues of Cardbeat US and UK uncover how the pandemic could be affecting on-time payments, which accommodations issuers are offering consumers to help ease the strain, and how card rotation is being impacted as a result.

While missing payments is not exclusive to COVID-19, wage cuts, job loss, and other unexpected financial stressors could make missed or late payments more common. According to Auriemma’s research, about one-sixth of cardholders in both markets say they have missed a payment over the last 6 months. During this time, unemployment figures in both regions increased, with many cardholders needing government aid. However, credit card issuers in both geographies are finding creative ways to assist cardholders through this unprecedented time.

Payment Holidays Provide Short-Term Relief

One of the many ways UK card issuers are helping relieve payment pressure for their cardholders is by offering payment holidays, which allows cardholders to miss monthly payments without penalty. Auriemma’s research found that 20% of UK credit cardholders were aware of the option to take a payment holiday from their issuer, and 33% of them accepted the offer.

The high take-rate is unsurprising given the circumstance. Pandemic-adjacent reasons are most often cited for their acceptance, including wanting to keep money in their bank account and that it would help with cash flow.

“Payment holidays offer a temporary solution for an immediate problem,” says Jaclyn Holmes, Director at Auriemma Group. “And while the accommodation has become a necessary offering for high street banks in this moment, issuers will need to determine and communicate its intended tenure before it becomes table stakes for their cardholders.”

Long-Term Accommodations Chart a Corrective Course

While payment holidays offer a short-term fix, impacted cardholders can be transitioned to other accommodations meant to improve their financial standing in the long-term. In the US, 40% of cardholders have been offered at least one of the accommodations tested in Auriemma’s study (e.g., a reduction in their monthly minimum payments or interest rate, waived interest charges, forbearance options, hardship programs)within the past 6 months.

According to Auriemma’s study, the top offers include increasing credit card limits (20%), offering hardship programs (17%), and providing forbearance options (16%). These accommodations are popular among those offered them, with over half accepting.

“Offering payment accommodations provides a halo effect for your brand,” says Holmes. “Those offered a payment accommodation say they felt more positively about their card issuer as a result, which, along with attractive rewards and benefits, could influence card selection when making a purchase.”

Accommodations and Attractive Rewards Could Impact Card Selection

Over six-in-ten cardholders in both regions report using multiple payment cards in the past 30 days. These individuals are also more likely than their counterparts who used a single payment card to have taken either a payment accommodation or a payment holiday. And while goodwill derived from payment accommodations has an ancillary influence on which card is chosen in the near-term, attractive rewards and benefits remain the main drivers of card choice, regardless of locale.

“When the dust settles, consumers struggling financially will look back on this time and remember which issuers had their back” says Holmes. “Rewards and benefits continue to be critical factors in card selection, but they’re not the only consideration at the moment. Issuers who give their cardholders both payment flexibility and relevant benefits during these uncertain times will be best suited to secure or maintain their top-of-wallet position.”

Survey Methodology

Cardbeat US

This Auriemma Group study was conducted online within the US by an independent field service provider on behalf of Auriemma Group (Auriemma) in June 2020 among 811 adult credit cardholders. The number of interviews completed for both is sufficient to allow for statistical significance testing among sub-groups at the 95% confidence level ±5%, unless otherwise noted. The purpose of the research was not disclosed, nor did respondents know the criteria for qualifying. The average interview length was 22 minutes.

Cardbeat UK

This Auriemma Group study was conducted online within the UK by an independent field service provider on behalf of Auriemma in July 2020, among 800 adult credit cardholders. The number of interviews completed on a monthly basis is sufficient to allow for statistical significance testing between sub-groups at the 95% confidence level ± 5%, unless otherwise noted. The purpose of the research was not disclosed nor did the respondents know the criteria for qualification. The average interview length was 20 minutes.

About Auriemma Group

For more than 30 years, Auriemma’s mission has been to empower clients with authoritative data and actionable insights. Our team comprises recognized experts in four primary areas: operational effectiveness, consumer research, co-brand partnerships, and corporate finance. Our business intelligence and advisory services give clients access to the data, expertise and tools they need to navigate an increasingly complex environment and maximize their performance. Auriemma serves the consumer financial services ecosystem from our offices in New York City and London. For more information, call Jaclyn Holmes at (+1) 646-454-4200.

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