More Brands Will Offer Secured Credit Cards for Customers During Uncertain Economic Times

Amid economic challenges, the credit landscape is shifting, Roy Ng, co-founder and CEO of Bond, writes in the new PYMNTS eBook, “What’s Your Plan? Payments Strategies for a Strong 2022 Finish.”

Over 150 million individuals in the U.S. are considered financially at risk today, according to Experian and U.S. Census data. These consumers continue to face pressure when managing their finances — from high inflation to economic uncertainty. Nearly one-third of U.S. consumers have a subprime credit score, defined as between 580 to 669, including 40% of millennials, who make up “the highest ratio of subprime consumers of any generation.” Additionally, an estimated 49 million U.S. consumers are classified as either “credit invisible” or “unscorable.”

Businesses and consumers face a tumultuous macroeconomic environment, skyrocketing inflation, and a looming recession. As a result, there is an opportunity for the credit landscape to shift, and the offering and use of secured credit cards are the solutions that will help brands and consumers alike.

Why Secured Credit Cards?

Historically, access to credit has been challenging, but advances in embedded finance are fundamentally changing this dynamic. Bond’s Credit Builder Card makes it simpler for FinTechs and brands to offer secured credit cards, a new, high-value financial product, directly to their customers when they need it most.

Consumers who use a secured credit card to build a strong credit history will qualify for a traditional credit card and the ability to take out an auto loan or mortgage at better interest rates. Secured credit cards offer a financial lifeline for underbanked and unbanked populations, giving consumers the ability to spend only funds they have loaded onto the card with the added benefits of building a credit history that can help credit-challenged consumers take control of their financial futures.

How Brands Benefit from Offering Secured Credit Cards

Brands offering secured credit cards will have stronger value propositions to serve customers seeking a path to greater financial stability. In fact, recent research from Cornerstone Advisors shows that most U.S. consumers want to secure financial products directly from their favorite brands and that 32% will spend more with brands they bank with than they did previously. The research also reveals that this interest spans a wide range of brands — from gaming to fitness and luxury to home improvement.

For example:

Nearly 8 in 10 (79%) gamers are interested in a credit card that will reward them for in-game purchases.

Two-thirds of home fitness fans expressed interest in health insurance from home fitness providers with rates based on their fitness habits.

Nearly two-thirds of fashion aficionados would consider getting an investment account from a luxury brand that allowed them to easily invest in that company’s stock, crypto, and other assets.

Ultimately, secured credit cards are a win-win for consumers and brands, providing them with trusted, accessible, and empowering payment options that meet their immediate needs and help them achieve their future financial goals.