News & Views - Savantor

Falling card revenues

Monday, 17 August 2009

Auriemma has some recent research indicating that the proportion of cardholders carrying balances on their credit cards has dropped by 40% in the last year.  This probably comes as no great surprise given the decline in credit card usage in the UK even before the current recession but it does mean that Issuers are looking for other ways to increase card profitability.  We have seen limits being cut, a move away from credit card cheques and a change in card issuing strategy away from those cardholders likely to pay off their balance each month.  It also seems that annual fees are making a comeback with Egg charging a £1 fee on their new Egg money World Mastercard although the card does offer incentives such as cashback and extended warranties on electrical goods. 

Egg is however the first major credit card provider to introduce fees on mainstream products and could be the first of many.  Auriemma predicts that credit cards with annual fees, specifically those with added features, will be widespread in the UK by the end of 2010.  So we seem to be entering a period of retrenchment whilst the industry decides where to go next with credit cards.  Will it be contactless that brings about a revival or more likely the appearance of multi app cards with credit as an additional app on debit cards alongside contactless and maybe a transport app?

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