Non-standard credit cards in the UK

Content

• Overview
• Catalyst
• Summary
  • Non-Standard Credit Cards In The Uk
• Introduction
  • The Non-Standard Market Refers To Consumers Who Are Not Considered For Credit By Mainstream Issuers
  • The Non-Standard Market Covers The Sub-Prime Sector
  • The Term 'Non-Standard' Covers A Wide Range Of Perceived Risk
  • Despite The Risks Involved, The Non-Standard Market Has Proved An Attractive Market To Certain Issuers In The Uk
  • Careful Segmentation And Risk Management Is The Key
  • Issuers In The Non-Standard Segment Face Greater Risks But Charge A Higher Interest Rate
  • Issuers In The Non-Standard Space Mitigate Their Risk With Lower Credit Limits
  • Intense Competition Has Led To Decreasing Margins And Profitability In The Mainstream Market
  • Datamonitor Estimates That The Non-Standard Market In The Uk Consists Of 7.1 Million Adults And Six Million Credit Cards
  • Datamonitor Uses Seven Steps To Size The Uk Non-Standard Population
  • Step One: The Number Of People In The Uk Of Working Age
  • Step Two: Absence Of A Bank Account
  • Step Three: Unemployment
  • Step Four: Income Support Claimants
  • Step Five: Ccjs
  • Step Six: Mortgage Arrears And Repossessions
  • Step Seven: Self-Employment With Less Than Three Years Of Proof Of Income
  • Elimination Of Double Counting
  • Datamonitor Estimates That There Are Seven Million Adults In The Uk That Fall Into The Non-Standard Category
  • Changes In Employment Status Proved The Key Driver For The Recent Increase In The Population
  • The Number Of Registered Ccjs Looks Likely To Increase In 2008
  • Mortgage Repossessions And Arrears Are Rising
  • Personal Bankruptcies Peaked In 2006, But Now Appear To Be Falling
  • Payments In Arrears Are At A High
  • Mainstream Issuers Have Been Tightening Their Criteria
  • Datamonitor Estimates That There Are 6.0 Million Credit Cards Issued To Non-Standard Individuals In The Uk
  • Datamonitor's Methodology Might Overestimate The Number Of Non-Standard Cards In Issue
  • Self-Employment And Having A Ccj Account For Over Half Of The Non-Standard Cards In Issue
  • Average Cardholding Is Lower In The Non-Standard Segment
  • The Value Of Transactions On Non-Standard Credit Cards Amounted To 9 Billion In 2007
  • Datamonitor's Estimation Methodology
  • Datamonitor Estimates That The Value Of Transactions On Non-Standard Cards Reached 9.0 Billion In 2007
  • The Market Is Composed Of Mainstream And Specialist Providers
  • Capital One, Hbos, Barclaycard And Rbs Are All Active In This Market
  • Several Mainstream Players Have Acquired Specialist Lenders In Order To Gain The Expertise Needed To Issue In This Market
  • There Are Several Advantages To This Approach, As Compared To Direct Market Entry
  • Mainstream Players Have Used Different Branding Strategies To Enter This Market
  • Market Entry Through A Subsidiary Allows Mainstream Issuers To Protect Their Prime Brands
  • However, Most Issuers Have Stayed Faithful To Their Prime Brands
  • Other Specialist Issuers Target The Lower End Of The Non-Standard Spectrum
  • Profile: Sav Credit
  • Profile: Vanquis Bank
  • Non-Standard Specialist Lenders Are Benefiting As A Result Of Mainstream Lenders Tightening Their Issuing Criteria
  • For Example, Vanquis Has Continued To Grow Rapidly And Become Profitable
  • Sav Credit Has Expanded By Inorganic Growth
  • As A Result, Non-Standard Specialist Providers Are Confident About The Future
  • It Is Likely That Other Firms Will Eventually Enter The Non-Standard Market
  • Datamonitor Forecasts Moderate Growth In The Non-Standard Credit Card Market
  • Datamonitor Forecasts That The Value Of Transactions On Non-Standard Cards Will Grow At A Cagr Of 7.2%
  • Datamonitor's Estimation Methodology
  • Datamonitor Forecasts The Value Of Non-Standard Credit Card Transactions To Reach 12.7 Billion By 2012
  • Growth Will Be Fastest Among Those With Checkered Or Limited Credit Histories
  • A Number Of Factors Are Forecast To Drive Growth In The Non-Standard Credit Card Market
• Summary
• Appendix
  • Definitions
  • Aagr
  • Apacs
  • Average Transaction Value
  • Balances Outstanding
  • Cagr
  • Credit Card
  • Debit Card
  • Non-Standard
  • Methodology
  • Primary Research
  • Secondary Research
  • Further Reading
  • Ask The Analyst
  • Datamonitor Consulting
  • Disclaimer
• List Of Tables
  • Table 1: A Selection Of Credit Cards From Non-Standard To Premium, 2008
  • Table 2: Number Of Mortgage Repossessions And Arrears, 2003-07
  • Table 3: Cardholding Per Person In The Mainstream And Non-Standard Sectors, 2003-07
  • Table 4: Sav Credit Fact File, 2008
  • Table 5: Vanquis Bank Fact File, 2008
  • Table 6: Aprs For Vanquis Credit Card Products. 2008
  • Table 7: Datamonitor's Forecast For The Non-Standard Credit Card Market, 2007-12
  • Table 8: Non-Standard Population Forecast, 2007-2012f
  • Table 9: Current Relevant Datamonitor Publications, 2008
  • Table 10: Future Relevant Datamonitor Publications, 2008
• List Of Figures
  • Figure 1: The Non-Standard Sector Encompasses A Range Of Consumers
  • Figure 2: The Sub-Prime Market Accounts For Just One Part Of The Non-Standard Market
  • Figure 3: The Non-Standard Population Covers A Spectrum Of Risk Prospects From The Near Prime To The Heavy Sub-Prime
  • Figure 4: The Uk Non-Standard Population Has Increased Significantly In The Last Two Years
  • Figure 5: Ccjs And Mortgage Arrears Contributed To The Decrease In Non-Standard Individuals, But Was Balanced By An Increase In Unemployment, 2003-2007
  • Figure 6: After A Decade Of Decline, Ccjs Are Now Rising Again, 1987-2008
  • Figure 7: Bankruptcies Peaked In 2006, But Now Appear To Be Falling
  • Figure 8: The Number Of Non-Standard Cards Has Grown From 4.3 Million To 6.0 Million, 2003-2007
  • Figure 9: Self-Employment And Having A Ccj Account For Over Two-Thirds Of The Cards In The Possession Of Non-Standard Individuals, 2007
  • Figure 10: The Non-Standard Sector Accounts For A Growing Proportion Of Transaction Values, 2003-07
  • Figure 11: Several Mainstream Players Have An Offering In The Non-Standard Market, 2008
  • Figure 12: The Table Of Figures Is An Optional Section And Can Be Removed
  • Figure 13: Sav Cross-Sells Other Financial Products On Its Website
  • Figure 14: Datamonitor Expects The Value Of Transactions To Grow At A Cagr Of 7.2%, 2007-12
  • Figure 15: The Non-Standard Population Will Increase Steadily Over The Next Five Years, 2007-2012f