The credit card market may be flooded by offers from highly specialized lenders, but consumers are giving more traditional bank issuers the edge, a survey has found.
A national telephone survey of 1,300 cardholders by Auriemma Consulting Group in Westbury, N.Y., found that 57% of consumers who carried a bank card revolved their balances, compared with 54% of nonbank cardholders.
This is the first time the consulting firm has tracked this information.
Pure card companies, such as MBNA Corp. and First USA Inc., have dominated the field for several years by employing aggressive marketing and targeting techniques. Bank issuers have lost market share over the past five years, but still maintain an edge over nonbank issuers.
The top five bank issuers had $112 billion in outstandings at yearend 1996, according to The Nilson Report, an Oxnard, Calif., newsletter. In contrast, the top five nonbank issuers represented $102 billion.
Industry observers said retail banks have long held a trump card-their own customers-that could help them level the playing field.
"A lot of people view the products they have from their primary bank as part of a relationship," said David Gagie, Auriemma's marketing director. "They feel more comfortable with maintaining that relationship through a credit card."
The survey also revealed that people who held cards from their primary bank were less likely to carry a competitor's card. Fifty-eight percent of those bank cardholders held more than one card, compared to 69% of nonbank cardholders.
Consumers who used their bank card most often had an average of 2.3 cards in their wallets, while cardholders more loyal to nonbank cards had an average of 2.6 cards.
Also, only 10% of bank cardholders had transferred a balance to another card in the last year, while 15% of nonbank cardholders made the jump.
It is not atypical for cardholders to demonstrate an allegiance to their primary bank, said Mr. Gagie. Bank issuers traditionally get higher response rates when they mail to their own customer base than when they mail to the open marketplace.
Research by Tampa-based Payment Systems Inc. earlier this year indicated that 45% of U.S. households have a card from their primary banks.
About 25% of U.S. households say the card they use most often is from their primary bank.
"The consumer feels an attachment and a natural loyalty to their primary financial provider," said James Rasmussen, president and chief executive officer of SunTrust BankCard in Orlando.
Mr. Rasmussen said as a result, issuers not only benefit from an increase in transaction volume and revolving balances, but credit quality is better.
To develop relationships with cardholders, bank issuers like SunTrust provide consumers with statements that incorporate credit card information with other banking services.
"Banks in general have not been as focused on the marketing issues of acquisition and retention as the larger issuers and the monolines," said Mr. Rasmussen. "In a bank, the credit card line of business is competing with other products and services to meet the relationship needs of a customer."
Having captured a significant share of the card market, many of the nonbank issuers are launching insurance, brokerage, and mortgage services not traditionally associated with cards.
"I think the nonbanks can compete," said Mr. Gagie, "but the primary bank has a natural advantage, which if they exploit it could work in their favor."