Online Credit Card Report
December 2009
FOR FURTHER INFORMATION, PLEASE CONTACT:
Andrea Jacobs
comScore, Inc.
703-438-2304
[email protected]
Kevin Levitt
comScore, Inc.
703-438-2384
[email protected]
Introducing the comScore Online Credit Card Report 2009 Edition
The comScore Online Credit Card Report 2009 Edition provides an in-depth look at the online credit card
industry, with a particular focus on how the economic environment and industry response have affected consumer
behavior and confidence. The report provides insight into consumer behavior and attitudes towards spending,
altered perceptions as a result of issuer changes to card accounts, cardholder loyalty, and online engagement
with account management tools and social media.
The study analyzes the online behavior of comScore’s passively-observed panel of 1 million U.S. consumers, as
well as attitudinal insights from a comScore survey of more than 2,000 U.S. Internet users conducted in October
2009.
In order to demonstrate shifts in the credit card industry, the findings from this study were compared to results
from the comScore Online Credit Card Report 2008 Edition, which included a survey of more than 2,000
respondents conducted in September 2008. Additional results from previously-published comScore studies are
also included in this report to provide further industry perspective.
Consumers Remain Cautious Despite Signs of Economic Recovery
Consumers Evaluate Spending in the Face of a Challenging Economic Environment
While consumers continue to struggle with economic factors such as lack of credit and rising unemployment, they
are showing a slightly more optimistic outlook when compared to last year. In the comScore State of the U.S.
Online Retail Economy Report (October 2009), 91 percent of survey respondents believe the economy is in either
poor or fair condition, down 2 percentage points from the previous year (Figure 1). However, 12 percent of
individuals upgraded their evaluation of the economy from poor to fair, indicating a slight improvement in
consumer sentiment from 2008.
2
Figure 1
Question: How would you rate economic conditions
today?
4%
6%
21%
31%
I Don't Know
Excellent
72%
Good
60%
Fair
Poor
2008
2009
Source: comScore, Inc. October 2008 and October 2009 State of the U.S. Retail Economy Survey
Despite the improved economic rating, 76 percent of survey respondents said that, compared to last year, they
are cutting back on their spending due to concerns about the economy (Figure 2). While this is a significant
percentage of consumers cutting back their spending, this number represents a 7-percentage point improvement
from three months earlier and an 8-percentage point improvement from six months earlier, a further indication of
cautious optimism among consumers.
3
Figure 2
Question: Compared to a year ago, are you
cutting back on your spending due to concerns
about the economy?
16%
17%
24%
No
84%
83%
76%
April
July
October
Yes
Source: comScore, Inc. April, July, October 2009 State of the U.S. Retail Economy Survey
While consumers are shifting toward a more positive outlook, growth in e-commerce sales remains well below
2007 growth rates (Figure 3). Despite market indications that the economy has bottomed out, there has yet to be
a recovery in consumer spending, an indicator that card issuers may continue to feel these effects in coming
months.
Figure 3
Quarterly e-Commerce Sales Growth vs. YA
23%
25%
23%
19%
17%
20%
11%
13%
15%
6%
10%
5%
0%
0%
Q1 07
Q2 07
Q3 07
Q4 07
Q1 08
Q2 08
Q3 08
-3%
Q4 08
Q1 09
-1%
-2%
Q2 09
Q3 09
-5%
Source: comScore, Inc. e-Commerce Measurement
Economic concerns have not only affected how much consumers are spending, but also their method of payment.
Similar to last year, roughly two-thirds of survey respondents said they are changing the way they spend due to
4
concerns about the economy. Last year, however, respondents overwhelmingly said they were more likely to use
cash. This year, 42 percent of respondents said they were more likely to use cash, but 40 percent said they were
also more likely to use a debit card, up 6 percentage points versus year ago (Figure 4). This presents a challenge
for credit card issuers, but also an opportunity for banks to promote their debit products.
Figure 4
Question: Have you changed the
way you pay for items due to
economic concerns?
50%
42%
Yes, I am more likely to use cash.
65%
67%
34%
40%
Yes, I am more likely to use a debit
card.
18%
23%
Yes, I am more likely to use a
credit card.
33%
35%
Yes, I have begun to consolidate
my spending to fewer credit cards.
2008
2009
Yes, I spread my spending among
a greater number of cards.
No
Yes
2008
12%
13%
5%
6%
2009
Source: comScore, Inc. October 2009 Credit Card Survey
When asked about specific types of purchases, consumers prefer to use a credit card for big ticket (and likely
infrequent) purchases such as travel and merchandise (Figure 5). Credit cards also have an edge in gas and
automotive expenses, likely due to rewards tied to gas cards. However, respondents said they prefer to use a
debit card for everyday purchases like groceries and at drugstores.
5
Figure 5
Question: Which is your preferred payment type for the following types of
purchases?
66%
Credit Card
Debit Card
53%
44%
44%
39%
37%
33% 34%
29%
26%
26%
14%
Travel
32%
12%
Merchandise
(Apparel,
Electronics, etc)
Gas and
Automotive
Business
Expenses
Entertainment
(Restaurants,
movies, tickets)
Drugstores
Groceries
Source: comScore, Inc. October 2009 Credit Card Survey
Changing Regulations Contribute to Consumer Dissatisfaction
Card Loyalty Wavers as Changes to Terms Prompt Consumers to Evaluate Issuers
In response to the economic environment and recent regulatory mandates, many card issuers have changed their
terms and conditions including raising interest rates, cutting credit limits, and increasing fees and late payment
penalties. When asked if consumers knew of any changes made to their credit card accounts by issuers in the
last year, 50 percent of survey respondents said that they were aware of a change (Figure 6). Of those who were
aware of a change, 54 percent said they received an updated terms and conditions for their credit card, and 53
percent said that their APR/interest rate increased.
6
Figure 6
Question: Has your issuer
made any of the following
changes in the last year?
Please check all that apply.
Received an updated terms and conditions
54%
Increased APR/interest rate
53%
50%
26%
Reduced credit limit
21%
Additional fees
50%
Changed reward system
Changed the format and/or information
included in my monthly statement
No, my issuer has not made any
changes that I’m aware of
Yes, my issuer has made changes
Increased annual fee
Closed my credit card account
17%
15%
14%
10%
Source: comScore, Inc. October 2009 Credit Card Survey
As changes made by issuers to consumers’ accounts have caused many individuals to alter their credit card
usage patterns, they have also contributed to a loss of confidence in their issuer, a more harmful long-term effect
for the industry. An overwhelming 54 percent of people who were aware of some change said that these changes
have worsened their perception of their credit card issuer (Figure 7).
7
Figure 7
Question: How have these changes affected your perception of your
credit card issuer?
7%
39%
54%
Worsened
Neutral
Improved
Source: comScore, Inc. October 2009 Credit Card Survey
Aside from purely economic factors, consumers are also taking direct action in response to these issuer driven
changes. Although approximately one-third of respondents said that they took none of the actions listed below,
55 percent claim that they now spend less on their card. In addition, 27 percent said that they no longer use that
card at all and 12 percent said that they closed the account completely (Figure 8). Card issuers that can provide
additional value to consumers while complying with changing credit card regulations may encourage customers to
continue spending on their credit cards.
8
Figure 8
Question: Have any of these changes made by your credit card
issuer, caused you to take any of the following actions within the
last year?
I spend less on that card
55%
No longer use that card for my purchases
27%
Closed my account
12%
Applied for a new credit card with another…
9%
Transferred my balance to another card
8%
Applied for a new credit card with that issuer
4%
I spend more on that card
3%
None of these
32%
Source: comScore, Inc. October 2009 Credit Card Survey
Ultimately, decreased satisfaction with credit card issuers has impacted customer loyalty. Of those who said that
some change has been made to their account, only 9 percent said that they applied for a new credit card with
another issuer. However, 81 percent said they would consider switching their card, compared to only 59 percent
among people who were not aware of a change to their account (Figure 9a).
Figure 9a
Question: Would you consider switching from your primary
credit card for any of the following?
59%
81%
I would consider switching
41%
I wouldn’t consider
switching
19%
Aware of changes to card
account
Not aware of changes to card
account
Source: comScore, Inc. October 2009 Credit Card Survey
9
Although customers who are aware of changes made to their accounts are more likely to switch cards than those
who are not aware of changes, 70 percent of respondents overall would still consider switching their primary
credit card. When asked what would incentivize them to switch, the majority of respondents said that they were
most likely to switch for a lower APR/interest rate or for better rewards/benefits (Figure 9b). This presents an
opportunity for banks and alternative payment methods (i.e. PayPal) to gain share of wallet by providing additional
value in these areas.
Figure 9b
Question: Would you
consider switching from your
primary credit card for any of
the following?
(All respondents)
67%
70%
Lower APR/interest rate
60%
Better rewards/features
59%
Benefits for holding multiple
accounts/cards
16%
33%
30%
Existing Banking or other credit
card relationships
15%
2008
2009
Better Customer Service
offered elsewhere
15%
I wouldn’t consider switching
I would consider switching
Better account management
features
13%
Source: comScore, Inc. October 2009 Credit Card Survey
Of the 59 percent of respondents who said they would switch for better rewards or features, an overwhelming 8
out of 10 said they would switch for cash back rewards. In addition, 4 out of 10 would switch for merchant
rewards and 3 out of 10 would switch for flexible points of gas rewards (Figure 10). This highlights that issuers
may be able to attract new customers with any mix of these rewards options as card loyalty remains low.
10
Figure 10
Question: Which of the following rewards types would get
you to switch?
Cash Back
83%
Merchant rewards
41%
Flexible Points
33%
Gas
30%
Airlines
Charitable donations
20%
4%
Source: comScore, Inc. October 2009 Credit Card Survey
Online Interaction between Consumers and Credit Card Issuers
Building Relationships with Customers to Increase Satisfaction and Loyalty
As consumers weather the economic conditions and as perceptions of credit card issuers change, interacting with
customers has become even more important in fostering loyal relationships and providing value to cardholders.
The Internet remains one of the most prominent channels for credit card issuers to interact with customers, with
about 7 out of 10 cardholders saying that they have accessed their accounts online at least once (Figure 11).
11
Figure 11
Question: Have you ever logged on with your user name and password to
your primary issuer’s credit card website?
27%
29%
No
Yes
73%
71%
2008
2009
Source: comScore, Inc. October 2009 Credit Card Survey
Throughout the past two years, respondents have also remained relatively stable in their online servicing feature
preferences. In both 2008 and 2009, more consumers found value in viewing their credit card statement than in
any other servicing feature, with 8 out of 10 respondents stating that the ability to view a statement is an important
feature in an issuer’s website (Figure 12). More than half of respondents also claimed that making a payment and
disputing a charge are important. Yet, three of the four most important features have declined in importance
versus year ago.
12
Figure 12
Question: How important are the following servicing features to you?
(Percent of respondents who selected
"very important" or "important")
82%
78%
View Statement
73%
72%
Make a Payment
60%
57%
Dispute a Charge
48%
44%
Email Reminders
43%
42%
Automatic Bill Pay
2008
2009
39%
40%
Balance Transfer
39%
37%
Turn Off Paper Statements
37%
35%
Request a Credit Limit Increase
29%
28%
Add an Authorized User
Mobile Alerts
N/A*
22%
* Mobile alerts was a new response option in 2009
Source: comScore, Inc. October 2009 Credit Card Survey
Although consumers who have logged into their account view servicing features, such as online statements as
important, more than 50 percent are unaware of many free, online services that are available (Figure 13). The
most recognized services on account management sites include features to sort transactions by date and
category, as well as calculators and tools to help manage one’s balance. Yet, even the most prominent feature,
sorting by date, only has visibility among 3 out of 10 respondents that access their account online.
13
Figure 13
Question: Does your issuer offer any of the following free online services?
Feature to sort my transactions by date
31%
Feature to sort my transactions by category
24%
Calculators/tools to help me pay off my balance
19%
Access to credit profile/report information
14%
Feature to sort my transactions by size
14%
Ability to integrate other financial accounts into the site
to view all accounts together
11%
Retirement planning and education
8%
Tax advice and education
8%
Don’t know
53%
Source: comScore, Inc. October 2009 Credit Card Survey
While a majority of customers that access their credit card issuer’s website are unaware of many of the services
offered, there is potential to increase usage of these services. Survey respondents said that they are most likely
to use features to sort transactions and tools to help pay off a balance (Figure 14). These tools will continue to
play an important role as consumers change their credit card spending behavior and voice concern about their
financial situation. In the current economy, encouraging consumers to better manage their credit card balances
will drive brand engagement and interaction with card issuers online, and may also improve faltering perceptions
within the credit card industry.
14
Figure 14
Question: Please rank the following services that you use or would use where
1=Use/Would use the most and 8=Use/Would use the least.
(Percentage displayed represents a ranking of 1 or 2)
Feature to sort my transactions by date
41%
Feature to sort my transactions by category
40%
Calculators/tools to help me pay off my balance
39%
Access to credit profile/report information
28%
Ability to integrate other financial accounts into the site to
view all accounts together
23%
Feature to sort my transactions by size
Retirement planning and education
Tax advice and education
12%
9%
7%
Source: comScore, Inc. October 2009 Credit Card Survey
As indicated above, many consumers are concerned with staying on top of their finances and managing their
liquidity in order to pay off debt. However, a consumer’s likelihood to use several account management services
depends on their tendency to either pay off or carry a monthly balance. While 39 percent of all respondents
would be most likely to use calculators/tools to help pay off their balance, this percentage is even greater for
consumers who carry a balance, with 49 percent saying they would use these tools (Figure 15). Therefore,
budget management tools represent an opportunity to develop relationships, particularly among consumers
seeking assistance to pay off credit card debt.
15
Figure 15
Percent ranking likelihood to use "calculators/tools to help pay
off my balance" as number 1 or 2
49%
29%
I pay my credit card off in full
every month
I carry a balance on my
credit card
Source: comScore, Inc. October 2009 Credit Card Survey
Potential for Growth in Credit Cards as a Method for Paying Bills
Opportunity to Drive Card Spend by Adding Value
The way consumers pay bills (e.g. utilities, insurance, etc.) has significantly changed over the past few years, due
in large part to increased availability, usability and security of online bill payment. The Internet represents a more
cost effective channel for bill payments, which represents an opportunity for issuers to drive spend onto their
credit card. This opportunity is particularly relevant in an economy where consumers are allocating less to
discretionary spending, but still have a responsibility to pay other bills. As issuers attempt to engage consumers
online and drive increased spend and loyalty, bill payment functionality has emerged more recently as an offering
at the card issuer’s website, in addition to that already offered directly through the billing merchant. Yet, 33
percent of consumers prefer to pay their bills with a check over other forms of payment. Credit cards and debit
cards are preferred by 25 percent and 24 percent of consumers, respectively (Figure 16).
16
Figure 16
Question: Which is your preferred payment type for bills
(utilities, insurance, etc.)?
5%
5%
Check
8%
33%
Credit Card
Debit Card
Cash
24%
Don't have a preference
Other (i.e. Paypal)
25%
While only 25 percent of individuals prefer to pay most bills with a credit card, 56 percent of respondents pay at
least one bill with their credit card, indicating that other factors besides payment type preference drive a
consumer’s selection of payment type (Figure 17).
Figure 17
Question: Do you pay bills (utilities, insurance, etc.) with your credit
card?
44%
No, I do not pay any bills with
my credit card
Yes, I pay my bills with my
credit card
56%
Source: comScore, Inc. October 2009 Credit Card Survey
As card issuers explore ways to encourage customers to use their credit card to pay bills, they should recognize
that their likelihood of success differs among individuals who already pay at least one bill with a credit card and
17
those who do not. Of respondents who do not pay any bills with a credit card, 47 percent would not change their
current behavior for any of incentives listed below. Respondents who already pay at least one bill using a credit
card, however, are much more receptive to paying a bill with an issuer’s card if offered some kind of monetary
incentive to do so. In fact, 59 percent would consider paying a bill with their issuer’s card for reward incentives
alone (Figure 18). More than one-third of these respondents could also be incentivized to pay using an issuer’s
card in exchange for cash and merchant discounts. Using monetary incentives to drive a change in spending
behavior, whether it be a change in payment type or a switch from one card to another, represents an opportunity
for issuers to provide value to consumers while driving additional spend on their card.
Figure 18
Question: Would any of the following encourage you to pay your bills
through your credit card website? (Please check all that apply)
31%
Reward points
59%
36%
Cash
52%
24%
Discounts from the merchant
Credit card statement credit
Issuer providing a more convenient
method of paying all my bills at once
Enrollment in Sweepstakes
None of these
39%
No, I do not pay any bills
with my credit card
9%
27%
Yes, I pay at least one bill
with my credit card
8%
23%
6%
14%
47%
11%
Source: comScore, Inc. October 2009 Credit Card Survey
Social Networking and Consumer Engagement
Awareness of Financial Institutions’ Presence on Social Media Sites is Key to Driving Interaction
Social networking sites have continued to experience substantial growth throughout the past year. While the U.S.
online population has grown by 4 percent in the past year, the social networking category has experienced a 19percent increase in visitors (Figure 19). This momentum is due in large part to sites like Facebook, Twitter and
LinkedIn, which have evolved and influenced the direction of the online social networking landscape. In October
18
2009 alone, consumers in the United States spent 300 million hours on Facebook, which represented 4.9 percent
of the total time spent online [comScore Media Metrix].
Figure 19
Top 10 Social Networking Sites
Total Internet
October 2009 Unique Visitors
(000) as % of Total Internet
Y/Y Growth
100%
4%
Social Networking Category
82%
19%
Facebook
49%
112%
Windows Live
37%
N/A
MySpace
32%
-16%
LinkedIn
10%
N/A
Twitter
10%
1,224%
Digg
7%
N/A
Classmates
7%
-25%
Deviant Art
5%
70%
MyLife
4%
27,851%
Yahoo! Buzz
3%
-10%
Source: comScore, Inc. Media Metrix
Results from the survey revealed that consumers are most likely to use social networking sites for leisure
activities. Nearly 8 out 10 survey respondents said that they use social networking sites to keep in touch with
friends, half use them to chat with friends, and 4 out of 10 respondents use social networking sites to share
pictures/videos (Figure 20). A smaller portion of respondents (14 percent), however, claim to use social
networking sites to learn about special offers and promotions from merchants.
19
Figure 20
Question: For which of the following reasons do you use a social
networking site?
Keep in touch with friends
79%
Chat with friends
51%
Sharing pictures/videos
41%
Update other users of my status
25%
Music
15%
Find out about special offers/promotions
14%
Classifieds
Other (please specify)
9%
5%
Source: comScore, Inc. October 2009 Credit Card Survey
As online social networking continues to gain momentum, card issuers are attempting to leverage the high levels
of consumer engagement on these sites to further connect with customers. Yet, while an overwhelming 82
percent of total Internet users visited a social networking site in October, only 12 percent of survey respondents
recall seeing their credit card issuer holding any type of social networking presence (Figure 21). Yet, all of the top
10 credit card issuers are currently present on Facebook or Twitter. Awareness will be a driving factor in an
issuer’s ability to create a successful relationship with customers via social networking.
Figure 21
Question: Are you aware of your credit card issuer having
a presence on any of the social networking sites?
12%
62%
Yes, I have seen my credit
card issuer on a social
networking site
No, I have not seen my
credit card issuer on a social
networking site
Not sure
26%
Source: comScore, Inc. October 2009 Credit Card Survey
20
Not only were most respondents unaware of their issuer’s presence within the social networking space, more than
half responded that they would not consider interacting with their issuer on these sites for any of the reasons
listed below (Figure 22). That said, at least 2 out of 10 users would engage with their issuer on a social
networking site for incentives like retailer promotions and online shopping offers. Therefore, by making this
population of consumers aware of their social networking presence, and by offering the right value proposition,
social networking sites represent one way that card issuers can drive engagement and influence brand
perceptions.
Figure 22
Question: Would any of the following entice you to engage with your
Financial Institution on any of the social networking sites?
Exclusive offers/promotions at specific retailers
22%
Exclusive online shopping offers/promotions
21%
Exclusive special offers/promotions for opening
new card accounts
16%
Online Customer Service related to your credit card
Credit help or financial advice
Tips for servicing your credit card account online
Charity donations
None of these
13%
12%
10%
8%
55%
Source: comScore, Inc. October 2009 Credit Card Survey
21
Key Findings and Conclusion
As a result of current economic conditions, optimistically cautious consumers continue to spend less on their
credit cards, shifting spending toward cash and debit. At the same time, changes made by issuers to card
accounts have caused consumers to lose confidence in their issuer.
•
Nine out of 10 consumers believe that the economy is in poor or fair condition, and 4 out of 10 are more
likely to use cash or debit for purchases compared to last year.
•
Of customers who have noticed changes to their card account in the last year, 54 percent said that their
perception of their card issuer has worsened, and 81 percent said that they would consider switching
credit cards.
•
Online interaction with consumers on the account management site has remained stable over the past
year, with 7 out of 10 card holders accessing their accounts online at least once.
•
As credit card issuers invest in tools and services to help consumers better manage their accounts online,
over half of consumers are unaware of these products.
•
Four out of 10 consumers would use services that help them sort transactions and pay off their credit card
balances.
•
While most consumers prefer to pay their bills through traditional methods such as checks, there is an
opportunity for card issuers to gain share of wallet by offering a variety of value propositions.
•
Only 25 percent of consumers prefer to pay most bills with a credit card, but 56 percent actually pay at
least one bill with their credit card.
•
Well over half of consumers said that they would be willing to pay their bills through their credit card
issuer’s website for rewards points or cash back incentives.
•
Despite strong growth in the popularity of online social networking, card issuers have yet to raise
consumers’ awareness of their presence and engage consumers in the social networking space.
•
Visitation to social networking sites has grown 19 percent over the past year, compared to 4 percent
growth across the total internet.
•
Currently, only 1 out of 10 consumers are aware of the presence credit card issuers on social networking
sites.
•
However, at least 4 out of 10 users would engage with their issuer on a social networking site, and 2 out
of 10 would do so if presented with exclusive offers and promotions.
A weakened economy and changing regulations in the credit card industry in 2009 have led issuers to make
changes to many consumers’ accounts, and in response, consumers reported changes in their perception of their
card issuers and the way they spend on their cards. Brand loyalty has declined as many individuals would
consider switching cards for better value propositions, mainly lower APRs and better rewards. However, issuers
have areas of opportunity in which they can help drive consumers to increase spending on their credit cards and
increase interaction with the brands. The majority of consumers would be willing to pay their household bills with
22
a credit card or through their issuers’ websites with the proper incentives, like rewards points or cash. Social
media is a rapidly growing area of the internet, yet most consumers are unaware of their issuers’ presence on
these sites. Consumer awareness is a challenge that issuers need to overcome in the near future, yet exclusive
offers and promotions could encourage consumers to interact with their issuers through social networking sites.
With the right value proposition, issuers have clear opportunities to regain consumer confidence and loyalty and
foster stronger relationships going forward.
About comScore, Inc.
comScore, Inc. (NASDAQ: SCOR) is a global leader in measuring the digital world and preferred source of digital
marketing intelligence. In an independent survey of 800 of the most influential publishers, advertising agencies
and advertisers conducted by William Blair & Company in December 2008, comScore was rated the ‘most
preferred online audience measurement service’ by 50% of respondents, a full 25 points ahead of its nearest
competitor. comScore’s capabilities are based on a massive, global cross-section of approximately 2 million
Internet users who have given comScore permission to confidentially capture their browsing and transaction
behavior, including online and offline purchasing. comScore panelists also participate in survey research that
gathers and integrates their attitudes and intentions. Using its proprietary technology, comScore measures what
matters across a broad spectrum of digital behavior and attitudes, helping clients design more powerful marketing
strategies that deliver superior ROI. With its acquisition of M:Metrics, comScore is also a leading source of data
on mobile usage. comScore services are used by more than 1,100 clients, including global leaders such as AOL,
Microsoft, Yahoo!, BBC, Carat, Cyworld, Deutsche Bank, France Telecom, Best Buy, The Newspaper Association
of America, Financial Times, ESPN, Fox Sports, Nestlé, Starcom, Universal McCann, the United States Postal
Service, the University of Chicago, Verizon Services Group and ViaMichelin. For more information, please visit
www.comscore.com.
FOR MORE INFORMATION, PLEASE CONTACT:
Andrea Jacobs
comScore, Inc.
703-438-2304
[email protected]
Kevin Levitt
comScore, Inc.
703-438-2384
[email protected]
23