Credit remains an essential tool for consumers managing both everyday spending and big-ticket plans. But getting the right card in the right wallet is more complex than ever. Digital discovery now drives most card choices, as consumers sift through online reviews and comparison tools to match products with their financial goals.
That shift, combined with lingering doubts about approval odds, has created what PYMNTS Intelligence and i2c research has found to be a “credit perception gap,” where would-be borrowers underestimate their chances of obtaining credit even as many are ready to pay up to $99 in fees for the right features.
Different Cards for Different Journeys
“There’s no one-size-fits-all approach,” Wendy Smith, AVP of Payment Systems at Clearview Federal Credit Union, said in a panel discussion with PYMNTS TV. Clearview split its flagship offering into two distinct cards after identifying sharply different usage patterns.
One group relies on their card as a safety net — highly sensitive to interest rates and carrying balances — “so our Platinum card with a low rate and simple features is the right fit,” she said. The other group pays down their balances quickly. “They often will pay the card in full. This group looks for value and benefits in return,” Smith said. They’re often very digitally engaged. They want cash back, they want to use their card for daily purchases, but they also want to make planned purchases that can be larger.
‘I Won’t Be Approved’ Myth
“I do think that mindset that I won’t be approved anyway can absolutely be a very real barrier,” Smith said. Clearview leans on digital preapprovals and “perpetual offers within our digital banking … to help close that psychological access gap. When our members log in, they see tailored preapproval opportunities, not just vague invitations to apply. This reframes that process from doubtful to confident: ‘I’m approved. I just have to accept [the offer].’”
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No matter the card, the perks or the fees, simplicity is key when issuers engage with would-be cardholders.
“If you cannot explain your product to the consumer in three bullet points — what it costs them and what it is — it’s going to be challenging,” said Das Mohandas, chief lending officer and general manager at Varo Bank. “The simpler it becomes, the easier for them to make a decision. They usually gravitate toward the one they fully understand what they’re getting into.”
Three Consumer Cohorts
Mohandas outlined three key cohorts neobank Varo encounters. One segment is comprised of younger generations that view debt with skepticism. Another group of consumers has proven to be sensitive about their credit and want to make sure that taking on new cards will not negatively impact their credit score. Other consumers are focused on building their credit and making sure that they’re spending within their limits.
Beyond the creation and issuance of the cards, maintaining the relationship is key. “We do a ton of measurement … at the top of the funnel as we look to acquire,” said David Durovy, SVP of transformation at i2c, speaking of issuers in general. “What we don’t always do a great job of is continuing to measure, and continuing to watch for the signals over the life of a relationship. That really is the nonnegotiable part here.”
Durovy said card providers must use “data-driven triggers” and real-time tools. “They literally need to be built into behavioral triggers on the platform as part of the experience so that we’re immediately batching out those communications,” he told PYMNTS.
From First Card to Graduation
Smith emphasized Clearview’s proactive reviews of those in-place relationships. “We do realize that card might not be the same right card 10 years from now. We have done reviews of our portfolio from time to time, and we’ve done line increases … that can give members a sense of progress and can help to show that their card is keeping pace with their financial needs.”
Mohandas described Varo’s dual strategy: “We are … a cash flow underwriting shop. So 95% of our underwriting is based on cash flow, 5% comes from the traditional bureau [data].” The entry point for cardholders is a traditional credit builder product, and unsecured loans, representing cross-pollination across the portfolio.
Durovy sees “a segment of one” as the future: “We need to use the data and the signals and their behaviors to understand where they’re at in that life cycle. Then we need to be presenting those offers. We need to be doing product graduation.” Varo already uses cash flow analysis to send timely installment offers. Clearview, Smith said, is exploring predictive outreach.
Data, Costs and Speed to Market
“Not every institution … can be rolling out new products every week,” Durovy said. “But what we can do is allow organizations to customize very quickly and roll out new products and new features very quickly.” i2c’s platform, he added, is “a very customer-centric platform, not a product-centric platform,” enabling near real-time product testing.
“We look beyond just consumer unsecured credit … thinking about it from a total wallet share perspective,” Durovy said. He pointed to opportunities in buy now, pay later and praised artificial intelligence for its ability to hyper-segment down to the household and the customer level and deliver “customized experiences and treatments that are truly at that segment of one.”
