Relatively few consumers in the United Kingdom own a charge card, but such a product soon could begin to grow in popularity as consumers shift their spending behaviors and issuers alter their card offerings, Auriemma Consulting Group suggests in a report issued this week.
For the UK edition of its Cardbeat report, Auriemma surveyed 501 UK credit cardholders online between July and September. The research suggests that 80% of UK cardholders have never owned a charge card, and only 8% have one.
But as more consumers shift their everyday spending toward debit cards and shy away from revolving debt on credit cards, charge cards requiring payment in full each month could rise in popularity, the researchers assert. “Charge cards could be positioned as a middle ground between credit and debit cards, providing specific (customer) segments with the benefits they need without the risk of increasing debt,” the report states.
Charge cards typically provide the security and convenience of a credit card, but without the temptation or risk of carrying a balance each month. And that ties in well with the debt-averse behaviors emerging among many consumers, according to the report. And while most charge cards come with annual fees that could discourage potential customers, the growing number of revolving-credit cards with annual fees could equalize that factor, Auriemma says.
Some 25% of respondents said they would consider using a charge card instead of a debit card, while another 25% said they would consider replacing their credit card with a charge card if the charge card’s value proposition was enticing.
The likelihood that more revolving-credit card providers would begin charging annual fees further enhances the likelihood of the market share for charge cards growing, the report says. “If (and when) fee-based payment vehicles become more prevalent, we believe that charge cards will naturally assume a more-prominent market position, though this may be as far as three years in the future,” the researchers concluded.
