By Nick Cucci
Fluid Pay
Every year, consumer behavior shifts, so product types will always go in and out of style. The credit card industry is no different. And there is no denying that consumer behaviors involving credit are changing fairly quickly. Is this good or bad for credit card companies? More importantly, is it good or bad for consumers?
Additionally, although times might be changing, the value of the credit card industry continues to stand strong. It even appears to be gaining more interest from potential customers. But what do the numbers say about credit card use and the modern consumer’s habits?
In 2023, the credit card industry's market size is $166.8 billion. Since this is no small amount of value, many observers believe that, despite ongoing concerns about inflation and a potential recession, credit cards are alive and thriving. In the last five years, the value of the industry has increased by roughly 1.4 percent annually (see IBISWorld, https://bit.ly/3lo79O6, for further details on the market).
For the longest time, credit cards have been an appealing option for anyone looking to make a purchase and pay for it later. It has been a fairly common consumer practice that if you don’t have the money for a particular purchase, you consider putting it on a credit card rather than taking out a loan. However, for modern shoppers, this seems to be changing.
The introduction of buy now, pay later (BNPL), an approach to lending that involves small, simple micro-loans to accommodate shoppers, has given consumers another choice. When shopping online, most of us are offered the option to buy now and pay later at the checkout, and we're offered a long list of potential companies to choose from.
Already, the BNPL model has caught so much attention that an estimated one in three shoppers is choosing this option when checking out online. In 2021 alone, the companies offering these services saw a 102.3 percent increase in users—and interest in BNPL continues to grow. Despite this shift, people are still using their credit cards. (For further BNPL data, see https://bit.ly/3XhNNr5.)
Rewards cards have also been an enticing option for shoppers for years. After all, who doesn’t want to get something extra when they are spending money? As long as credit card companies offer good rewards, they have a much higher chance of catching customer interest. However, to maintain interest, companies may need to focus on ensuring that those rewards are actually used: roughly 70 percent of rewards credit cardholders have unused rewards, according to Lending Tree data, https://bit.ly/3YBcboH.
Of course, if credit cards do not offer a way to make sure these rewards are used, they run the risk that their customers will forget the value of the card in the first place. According to an August 2022 Wells Fargo survey, bwnews.pr/3YFvPjg, since 65 percent of credit cardholders value rewards now more than ever before, it's crucial to incentivize them to use rewards before someone else sweeps in, offering balance transfers and other rewards they may find appealing.
Consumers want credit cards that offer them incredible perks. And more people are choosing to explore credit card rewards for digital channels, with the topic becoming more popular among finance-savvy influencers on the internet.
In 2023, credit cardholders are getting bad news: rising rates. During 2022, these rates reached record highs (see https://cnb.cx/3YGmmZk). This trend is expected to continue. With rates increasing, it is becoming even more important for consumers to pay off their debts. Unfortunately, however, credit card debt is on the rise as well.
Credit card usage changed significantly in response to the pandemic and the significant changes it brought about. However, as inflation rises and more people struggle, credit card usage seems to be growing.
With the increase in credit card usage, experts believe we may see credit card debt in the United States rise to a shocking $1 trillion in the second half of 2023 (see https://bit.ly/3lo3nnT).
Consumers are looking for two major things in 2023 when it comes to credit cards. They want better opportunities and better perks. With growing online resources, more consumers are looking into their options and seeing who can offer them the best deal.
More people are looking for credit cards, as well. In 2022 alone, the percentage of consumers in the United States seeking out new credit cards rose to 26.7 percent (see https://bit.ly/3I8Zs7f). Surprisingly, this high percentage is specific to those who applied. The total number of interested consumers is even higher.
Right now, credit card companies have the opportunity to impress their customers and make themselves the obvious choice. Since more people are looking, now is an opportune time to roll out the best offers that a company has.
While a credit card does offer a great opportunity for shoppers to pay for something without blowing their whole paycheck—at least immediately—it is still important to know that consumers expect more from modern cards. Today’s consumers do not see credit cards as merely a way to pay for purchases. They see them as an opportunity to get added benefits. When asked, 73 percent of card users said they use credit cards for rewards and data security (see https://bit.ly/3YlA57Q).
In the right hands, credit cards are valuable tools that can offer consumers significant benefits. From added protection and rewards to everyday convenience, credit cards will likely continue to be a standard part of the economy for generations to come. As long as companies find ways to appeal to their customers and offer great deals, credit card agreements will remain mutually beneficial. Companies and consumers alike must strive to find the perfect balance to carry the credit card industry forward. 
Nicholas Cucci is the co-founder and COO of Fluid Pay LLC. Cucci is also a graduate of Benedictine University and a member of the Advisory Board and Anti-Fraud Technology Committee for the Association of Certified Fraud Examiners, as a CFE himself.. Fluid Pay is the ONLY 100 percent cloud-based Level 1 PCI Payment Gateway processing transactions anywhere in the world and was named Top Payment Processing Company for 2022 by Banking CIO. Contact Nick at Nick@FluidPay.com.
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