Where is the Credit Card Industry Heading for 2023?
Every year, consumer behavior shifts, and there will always be product types that go in and out of style. The credit card industry is no different, and there is no denying that consumer behaviors are changing around credit cards at a fairly high rate. Is this good or bad for credit card companies? More importantly, is it good or bad for consumers? In this post, we will discuss some of the changes to look out for in 2023.
What We Know About the Credit Card Industry for 2023
Trends, technology, and the economy are always changing. Ultimately, these changes impact most major industries, and credit cards are no exception. The credit card industry continues to hold strong and seems to be gaining more interest from potential customers, but what do the numbers say about credit card use and the modern consumer’s habits? Let’s find out.
The Value of the Credit Card Industry
Although times might be changing, the value of the credit card industry continues to stand strong. In 2023, the market size of the credit card industry is $166.8 billion. Since this is no small amount of value, it comes as no surprise that many believe that credit cards are alive and thriving despite some of the concerns about the economy. In the last five years, the value of the industry has increased by roughly 1.4% annually.
Credit Cards vs. Buy Now, Pay Later
For the longest time, credit cards have been a fairly specific option for anyone looking to make a purchase and pay for it later. It has been normalized that if you don’t have the money, you might consider putting it on a credit card rather than taking out a loan. For modern shoppers, this seems to be changing.
The introduction of buy now, pay later–an approach to lending that involves small, simple micro-loans that accommodate shoppers, is giving consumers another choice. When shopping online, most of us are offered the option to buy now and pay later at the checkout option and offered a long list of potential companies to choose from.
Already, the buy now, pay later model has caught so much attention that an estimated 1 in 3 shoppers is choosing this option when checking out online. In 2021 alone, the companies that offer these services saw a 102.3% increase in users–and the interest continues to grow. Despite this shift, people are still using their credit cards.
People Continue to Value Rewards
Rewards cards have 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, companies may need to focus on ensuring that those rewards are actually used to maintain interest, with roughly 70% of rewards credit cardholders having unused rewards.
Consumers want credit cards that offer them incredible perks. In fact, more people are choosing to focus on exploring credit card rewards for digital channels, with the topic becoming more popular among finance-savvy influencers on the internet.
Of course, if credit cards do not offer a way to make sure that these rewards are used, they run the risk that their customers may forget the value of the card in the first place. Since 65% of credit cardholders value rewards now more than ever before, it is crucial to incentivize them to use rewards before someone else sweeps in, offering balance transfers and other rewards.
Credit Card Rates and Debt Levels
In 2023, credit cardholders are getting bad news–rising rates. During 2022, these rates already reached record highs, and it is expected that this trend will continue. With rates increasing, it is becoming even more important for consumers to pay off their debts. Unfortunately, credit card debt is starting to rise as well.
Credit card usage has changed significantly in response to the pandemic and the changes surrounding it. However, as we start to see inflation rise and more people begin to struggle, credit card usage seems to be growing. With the increase in credit card usage, experts believe that we may see credit card debt in the United States rise to a shocking $1 trillion in the second half of 2023.
What Consumers Want
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.
New Credit Cards
More people are looking for credit cards, and they all want the best options available. In 2022 alone, the percentage of consumers in the United States seeking out new credit cards rose to 26.7%. Surprisingly, this high value is specific to those who applied. The total number of interested consumers is even higher.
Right now, credit card companies have the opportunity to really impress their customers and make themselves the obvious choice. More people are looking, which means that now is a great time to roll out the best offers that a company has.
While a credit card does offer a great opportunity for consumers to pay for something without blowing their whole paycheck–at least immediately–it is still important to know that they expect more from modern cards. Today’s consumers do not just see credit cards as a way to pay for a purchase. They see them as an opportunity to get added benefits. When asked, 73% of credit card users said they use credit cards for rewards and data security.
The Future of Credit Cards
In the right hands, credit cards are valuable tools that can offer a lot to consumers. From added protection and rewards all the way to standard convenience, it seems likely that credit cards will 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, these agreements will continue to be mutually beneficial. Companies and consumers alike must strive to find the perfect balance to carry the credit card industry forward.