62% of Credit Card “Outsiders” Using Some Other Form of Credit
A recent report from PYMNTS Intelligence and Atelio by FIS entitled “Decision Guide: What Credit Card Outsiders Want — and How FIs Can Bring Them Back,” found that a strong majority (62 percent) of consumers without traditional credit cards are more receptive to other credit-related products like buy now, pay later (BNPL) and store cards.
The study identifies “credit card outsiders” with four different personas: the “second chancers” who had credit cards in the past, the “credit curious” who are interested in obtaining a credit card, the “gone for goods” who are no longer interested, and the “never-nevers” who have never had a credit card and have no interest in obtaining one.
Since the majority of credit outsiders use other credit-like products, the research suggests a preference for accessible, short-term credit solutions instead of traditional loans. Financial institutions have the opportunity now to offer low-commitment credit products to these consumers that better align with their current financial habits.
Secured credit cards are the most sought-after product for these consumers at 29 percent, followed by traditional credit cards at 28 percent and BNPL products at 27 percent. The credit curious and second chancers are particularly interested in secured credit cards, suggesting their potential to engage in credit products, since secured credit cards offer credit-building opportunities.
However, 1 in 3 outsiders cite a lack of necessary upfront funds as the main barrier in adopting secured credit cards. Credit outsiders also said that secured cards do not improve spending flexibility (33 percent), and cited high annual fees or interest rates (32 percent), as well as hesitation to carry debt on secured cards (29 percent).
The study emphasizes the importance of financial institutions addressing both the financial and psychological obstacles preventing outsiders from obtaining traditional credit products. It also highlights the significance of building trust and offering transparent, accessible credit solutions to serve these consumers.
