Credit With Training Wheels: Secured Credit Cards and the Credit-Wary Consumer

Financial institutions can convert credit card outsiders to become holders of secured credit cards by encouraging them to think long term.

While some of these consumers who do not have a credit card are wary of credit, most also know that secured credit cards can be part of a comprehensive strategy to build credit, achieve financial stability and manage emergencies, according to the PYMNTS Intelligence report “Decision Guide: Engaging Consumers Interested in Secured Credit Solutions.”

Financial institutions can convert these consumers by positioning secured credit cards as part of a consumer’s comprehensive credit strategy and by providing transparent terms, personalized offerings and strong customer support, the report said.

Fifty-three million U.S. consumers do not have a credit card, the report found.

PYMNTS Intelligence identified four common personas among these consumers.

These personas include the “second chancers,” who previously had a credit card but may have encountered financial difficulties in the past; the “credit curious,” who have never had a card; the “gone for goods,” who used to have a card but are no longer interested in having one; and the “never-nevers,” who have never had a card and have no interest in getting one.

Eighty-one percent of second chancers and the credit curious are at least somewhat interested in obtaining a credit card.

Even those who are more wary of credit said some factors make them interested in getting a credit card.

Over 50% of the consumers in each of the four personas said they would like to have a credit card available in case of an emergency.

Over 40% are interested in a card that would help them build credit and improve their credit score.

With one exception, over 40% of the consumers in these personas would like to have a credit card so that they could pay for purchases over time. Among gone-for-good consumers, however, only 34% are interested in getting a card for that reason.

Because of these commonalities among the four personas of consumers who do not have a credit card, financial institutions can capitalize on this interest by offering secured cards as a way to gain these benefits while also having protective guardrails.

With these tools, financial institutions can become partners in helping consumers embark on a comprehensive credit strategy.

That is a message that will resonate with a large share of the consumers who are currently credit card outsiders.

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