What Credit Card Outsiders Want — and How FIs Can Bring Them Back
January 2025
Many consumers who do not have credit cards seek financial products tailored to their needs. Data shows targeted solutions, including secured cards, can help these credit card outsiders reengage and rebuild their trust in using credit.
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This decision guide explores how product design and segmentation can address the unique financial challenges of credit card outsiders. It highlights the influence of life events, financial behaviors and product features on their choices. The guide also explores which financial and credit products these consumers without traditional credit card accounts utilize.
In this edition, we outline the types of financial products that appeal to these consumers. The analysis goes beyond simply comparing standard credit cards and secured cards against other credit products. This guide provides valuable insights related to:
segmenting credit card outsiders
customizing product offerings
effectively marketing to credit card outsiders
“Decision Guide: What Credit Card Outsiders Want — and How FIs Can Bring Them Back,” a PYMNTS Intelligence and Atelio collaboration, draws on an original survey of 2,630 U.S. consumers conducted from March 13, 2024, to April 2, 2024. This brief explores credit outsiders’ views on secured cards, FI engagement opportunities and best practices for tailored solutions.
These individuals previously had a credit card and are interested in obtaining one again.
Credit curious
These individuals have never had a credit card but are interested in getting one.
Gone for goods
These individuals used to have a credit card but are no longer interested in having one.
Never-nevers
These individuals have never had a credit card and have no interest in obtaining one.
Understanding credit card outsiders’ current use of financial products
Most credit card outsiders have some credit product. The most popular — store cards and BNPL plans — function similarly to credit cards.
Credit card outsiders should not be confused with unbanked consumers or consumers who avoid all credit products. In fact, 62% of credit card outsiders hold at least one type of credit account. The most widely used are store cards and buy now, pay later (BNPL) plans. This suggests outsiders prefer accessible, short-term credit solutions over traditional loan products.
Second chancers and the credit curious — two key outsider personas — are more likely to hold store cards and BNPL accounts than other outsiders. The outsiders who express interest in credit cards in the future gravitate toward products that function similarly to credit cards. Their openness to credit card-like options is something card issuers should note. It points to the importance of offering flexible, low-commitment credit tools to reengage these groups.
Understanding the credit preferences of various consumer segments is important for formulating an outsider engagement strategy. Consumers with higher scores are more likely to hold a broader range of financial products. These products can include personal loans, auto loans and mortgages. In contrast, those with lower scores tend to rely more heavily on BNPL services and store cards. This usage points to the need for financial institutions (FIs) to develop offerings that serve different levels of creditworthiness.
These insights reveal opportunities for FIs to build trust with credit card outsiders by offering tailored and accessible credit solutions. Offering flexible products that address an outsider’s credit needs and financial habits is key to reengaging them.
Identifying the credit solution that can attract credit card outsiders
Outsiders are more interested in new credit options that enable immediate use and less interested in new loans.
Credit card outsiders’ most sought-after financial products include secured credit cards, with 29% interested, and traditional credit cards, with 28%. These products address immediate credit needs. BNPL services, with 27% interest, rank closely behind, reflecting the appeal of alternative, accessible payment solutions. Store cards and personal loans follow close behind at 26% and 23%, respectively. The prevalence of these products further emphasizes a preference for offerings that fulfill short-term credit demands. In contrast, traditional loan products requiring longer time commitments, like auto loans, cited by 18%, and mortgages, cited by 17%, have more modest appeal.
Among outsiders, second chancers and credit-curious consumers are the most interested in obtaining a credit card. Secured credit cards, traditional credit cards and BNPL appeal to these consumers.
Credit scores correlate with interest levels. Consumers with higher scores express greater enthusiasm for nearly all new credit products, and secured cards stand out for offering both credit-building potential and accessibility. These findings suggest that FIs can attract credit card outsiders by prioritizing flexible, short-term credit solutions. In addition, FIs may be able to de-emphasize traditional loan products since they fail to align with the borrowing features most outsiders prioritize while continuing to appeal to outsiders.
Determining products that will overcome current obstacles to access
The biggest hurdle credit card outsiders face in obtaining a secured credit card is the need to have money upfront. This may explain why they show greater interest in BNPL and store cards.
Secured credit card adoption faces several obstacles. One in 3 outsiders reported not having the necessary funds to secure the card as their primary barrier. An equal share of respondents believed that secured cards fail to improve spending flexibility, limiting their appeal. Another 32% point to high interest rates or annual fees as factors limiting secured cards’ appeal, and 29% dislike carrying debt on a secured card. These factors are financial and psychological barriers deterring outsiders.
Another significant concern is tying up money, with 27% reporting they would prefer not to. This apprehension suggests why alternatives like BNPL and store cards, which do not require upfront deposits, are more attractive to these consumers. Meanwhile, security concerns play a big role for outsiders: 16% worry about fraud, while 14% fear data theft. Furthermore, 13% lack trust in secured credit card providers, underscoring that FIs need to communicate clearly and be transparent.
Currently, half of second chancers say they are unwilling to adopt secured cards. These outsiders cited not having sufficient funds for the collateral required to open a secured card as their primary obstacle. A secondary obstacle is not wanting to tie up the funds needed for a secured card. Lowering deposit requirements could help FIs reengage members of this group, particularly those most eager to reenter the credit market. Emphasizing the long-term benefits of secured cards, such as building credit scores, could mitigate concerns about upfront costs.
Confusion around application processes, cited by 9%, and credit score risks, cited by 9%, are less frequent but still notable barriers. Simplifying the application process and highlighting secured cards’ ability to build credit can help address these hesitations.
For individual credit card outsiders, several factors limit the appeal of secured credit cards.
The lack of upfront funds and preferring to live within their means are significant barriers to reengaging outsiders. Never-nevers, at 29%, and gone for goods, at 41%, are especially likely to cite spending within their means as a reason to avoid secured credit cards. However, second chancers, at 53%, are the most likely to cite insufficient funds as their primary obstacle. These barriers reflect deep financial apprehensions about the use of credit.
Many credit card outsiders also identify high interest rates and fees as deterrents. Notably, gone for goods, at 36%, and second chancers, at 31%, are the most likely to cite this factor. FIs need to strike a delicate balance that ensures secured credit cards are affordable for outsiders and profitable for them.
Fraud risks and mistrust of providers are barriers card issuers also need to address. For instance, 19% of never-nevers and 18% of second chancers express worries about fraud. Mistrust of providers ranges from as little as 9% among gone for goods to as much as 17% among never-nevers. Promoting security features and transparently communicating are crucial to easing credit card outsiders’ worries.
FIs that address these concerns can attract the more receptive outsiders, such as second chancers and the credit curious.
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“Decision Guide: What Credit Card Outsiders Want — and How FIs Can Bring Them Back” is a PYMNTS Intelligence and Atelio collaboration. The guide is based on a survey of 2,630 U.S. consumers conducted from March 13, 2024, to April 2, 2024. The survey sought to understand the consumers who do not have credit cards. It explored how not having access to credit cards impacts their financial lifestyle and which credit products, if any, they would be interested in. The sample was balanced to match the U.S. population in a number of key variables.
About
FIS is a financial technology company providing solutions to financial institutions, businesses and developers. We unlock financial technology that underpins the world’s financial system. Our people are dedicated to advancing the way the world pays, banks and invests, by helping our clients confidently run, grow and protect their businesses. Our expertise comes from decades of experience helping financial institutions and businesses adapt to meet the needs of their customers by harnessing the power that comes when reliability meets innovation in financial technology. Headquartered in Jacksonville, Florida, FIS is a member of the Fortune 500® and the Standard & Poor’s 500® Index.
Atelio by FIS is an innovative FinTech platform that provides the building blocks for financial institutions,
businesses and software developers to embed financial services into their offerings.
To learn more, visit www.atelio.com. Follow Atelio on LinkedIn and X (@AteliobyFIS)
PYMNTS Intelligence is a leading global data and analytics platform that uses proprietary data and methods to provide actionable insights on what’s now and what’s next in payments, commerce and the digital economy. Its team of data scientists include leading economists, econometricians, survey experts, financial analysts and marketing scientists with deep experience in the application of data to the issues that define the future of the digital transformation of the global economy. This multilingual team has conducted original data collection and analysis in more than three dozen global markets for some of the world’s leading publicly traded and privately held firms.
The PYMNTS Intelligence team that produced this report:
Lauren Chojnacki, PhD: Senior Research Manager
Adam Putz, PhD: Senior Writer
Matthew Koslowski: Content Editor
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