Private Label Credit Cards: US Market Trends, 14th Edition

Description

The 14th Edition of the Packaged Facts report, Private Label Credit Cards, covers the market for private label credit cards (PLCCs), with an emphasis on card issuers, merchants, consumers and the competitive and economic challenges shaping the industry. The report provides a comprehensive assessment of private label credit card issuers and retailers and emerging trends, strategies and challenges facing each category of industry participants as well as emerging hybrid products such as healthcare PLCCs and PLCCs blended with BNPL financing. A review of retail credit card program features is provided discussing benefits, analysis and review of retail card strategies and trends for growth.

Specifics of the report include information on innovative strategies employed by large retailers to expand their market share, highlighting the importance of growth and innovation in the sector. It further outlines the future strategies of leading private label credit card issuers such as Bread Financial, Citi Retail Services, Capital One, Synchrony Financial Services, TD Bank, and Wells Fargo, indicating a forward-thinking approach in financial services. Additionally, the assessment identifies new opportunities in the private label credit card (PLCC) market, including those in the medical and fuel sectors, suggesting a diversification in the types of PLCCs available. A detailed analysis of seven private label credit card programs is conducted within the framework of the retailer's loyalty program, examining the results of programs from Best Buy, TJ Maxx, J.Crew, Kohl's, Target, Amazon, and WEX. Lastly, the study evaluates consumer usage patterns of private label credit cards, segmented by retailer type, to understand which cards are most frequently used, providing insights into consumer preferences and behaviors.

Product Code: LA19095915

Table of Content

CHAPTER 1: EXECUTIVE SUMMARY

SCOPE OF REPORT
REPORT METHODOLOGY
PRIVATE LABEL CREDIT CARD OVERVIEW
In Past Year, PLCCs Have Declined 6%
PLCCs Being Converted to Co-Branded Cards
Younger Consumers Not Using PLCCs
Where is the Industry Going?
Table 1-1. Private Label Credit Card Forecast, 2024-2027 ($ billion)

CHAPTER 2: MARKET SIZE AND GROWTH

CONTEXT FOR MARKET PERFORMANCE
Table 2-1. Annual Growth of Revolving and Non-revolving Credit, 2019-2023 ($ trillion)
SIZING THE OVERALL PAYMENTS MARKET

Table 2-2. Share of Payment Instrument Use by Household Income, October

More Consumers Use Card Payments Than Have a Bank Account
Figure 2-1. Shares of US Consumers Who Adopted Payment Cards and Online Payment Accounts,
2016-2023
Consumers Feeling Financially Stressed Ignore at Least One Element of Finances
Optimizing Payment Choices
US PRIVATE LABEL CREDIT CARD MARKET SIZE
Outstandings of Largest PLCC Issuers
Table 2-3. Outstandings, Private Label Credit Cards, Largest Issuers, 2021-2023 ($ billion)
Table 2-4. Purchase Volume, Private Label Credit Cards, Largest Issuers, 2021-2023 ($ billion)
100 Million Consumers Carry PLCCs
PLCCs are First Step in Building Credit
Consumers are Drawn to PLCCs for Rewards
Table 2-5. Average PLCC Credit Balance by Generation, 2022-2023
PLCC Originations Declining
Figure 2-2. PLCC Originations, 2021-2023
Younger Consumers Resist Appeal of PLCC
Table 2-6. PLCC Ownership Between Millennial and Gen Z Consumers at the Ages of 22-24, 2013 and
2023
ii
In Past Year, PLCCs Have Declined 6%
Table 2-7. Consumer Interest in Applying for Store Credit Cards During the Holiday Season, 2018-2023
Table 2-8. General Purpose Credit Card and PLCC Interest Rates, 2018-2023
CFBP Targeting Egregious Late Fees
Issuers Could Charge $41 as Late Payment Fee
New CFPB Late Fee Regulation Could Potentially Eliminate $9 Billion of Issuer Income
Subprime PLCCs Pay Disproportionate Share of Late Fees
Late Fees Drive Profitability for Bread Financial and Synchrony Financial
Late Fee Rule Effective Data Delayed by Lawsuits
If Late Fee Rule is Vacated, Issuer Profitability Would Increase
DRIVERS OF PRIVATE LABEL CREDIT CARD PERFORMANCE
Growing the Market for Private Label Cards with New Products
Healthcare PLCC Promote the Issuer's Brand
Figure 2-3. Issuers and Marketing Partners Move Seamlessly Between Brands
Consumers Have Paid Over $1 Billion in Interest on Deferred Interest Medical Cards
Synchrony's CareCredit is the Largest Medical Credit Card Program
Bread Financial and Wells Fargo Also Offer Medical Cards
Medical Private Label Credit Cards Help Consumers Address Large Deductibles
Healthcare PLCCs Often Target Niches
The New PLCC Product: Fleet Cards
Figure 2-4. The WEX Fleet FlexCard
Fleet and Fuel Cards Become Platforms for Providers' Growth
Table 2-9. WEX Revolving Credit Fuel Cards, 2022-2023 ($ million)
ABERCROMBIE AND FITCH RETAINS CUSTOMERS WITHOUT A PLCC
Table 2-10. Abercrombie & Fitch Net Sales by Brand, 2022-2023 ($ billion)

CHAPTER 3: PROFILES OF TOP PRIVATE LABEL CREDIT CARD ISSUERS

SYNCHRONY FINANCIAL
Overview
Table 3-1. Synchrony Financial Performance Metrics, 2019-2023 ($ billion and # million)
Synchrony Marketplace
Synchrony's Income is Dependent on its Five Largest Programs
Wall Street is Assuaged by Long-term Contracts with Largest Partners
2023 was a Strong Year for New Accounts and Account Renewals
Synchrony's 2023 Account Wins and Renewals

Table 3-2. Synchrony New and Renewed Partnerships,

Dual Cards Offer Issuers the Pros of Both Co-Branded and PLCC
Synchrony's Five Sales Platforms
Figure 3-1. Synchrony's Key Performance Metrics by Sales Vertical, 2023 ($ million)
Home & Auto: Car Care and Home Cards
Figure 3-2. Synchrony Car Care Card
Digital Vertical
Diversified & Value
Lifestyle
Health & Wellness
Synchrony's Sub-Category PLCCs are Customizable by Merchants
Figure 3-3. Synchrony Sub-Category PLCCs are Customizable
Cashing in on Pets Best

CareCredit Sales Grew 18.5% in

Roll-up of Specialized Human and Veterinary Care Benefits Synchrony
CareCredit Cardholders Offered Deferred Interest Financing
CareCredit is Driving Growth
Walgreens is CareCredit's Largest Account
Introduction of myWalgreens
Figure 3-4. myWalgreens Cards
Digital Platform Accounts for 30% of Synchrony's Card Revenue
Digital Partners
Digital Wallet Provisioning is Boon to Digital Partners
Synchrony Pay Later is its BNPL
Table 3-3. Synchrony Loan Receivables by Product Type, 2021-2023 ($ billion)
Table 3-4. Synchrony Financial, Receivables and Purchase Volume of PLCC, 2021-2023 ($ billion)
CITI RETAIL SERVICES
Overview
Table 3-5. Citi Retail Services Purchase Volume and Receivables, 2021-2023 ($ billion)
Portfolio Acquisition and Expansion
CAPITAL ONE
Overview
Capital One Acquiring Discover
Capital One's $265 Billion Community Benefit Plan
Capital One and Walmart
Table 3-6. Capital One Credit Card and Private Label Outstandings and Purchase Volume, 2021-2023
($ billions)
WELLS FARGO
Overview
Table 3-7. Wells Fargo, All Credit Card Accounts, 2021-2023 ($ billion)
Simplifying Retailer Integration
Table 3-8. Wells Fargo Private Label Credit Card Purchase Volume and Receivables, 2021-2023 ($
billion)
Charge-offs Within Expectations
BREAD FINANCIAL
Overview
Table 3-9. Bread Financial Purchase Volume, Receivables and Interest and Fees, 2021-2023 ($ billion)
Bread Deposit Product Growth Needed to Lower Cost of Funds
Table 3-10. Bread Financial Purchase Volume by Product, 2022-Q1 2024 ($ billion)
iv
Bread's Strategies to Offset Impact of CFPB's Late Fee Actions
Standard Bread PLCC Interest Rates Now 36%
TD BANK
Overview
TD Bank Entered US PLCC Market Through Portfolio Acquisitions

TD Bank Had a Full Plate of Challenges in

TD Bank's PLCC and Financing Options
Figure 3-5. Rare Carat Card
Figure 3-6. Cub Cadet Card
Table 3-11. TD Bank US PLCC, 2021-2023 ($ billion)

CHAPTER 4: US RETAILER PLCC PROGRAMS

BEST BUY
Overview

Figure 4-1. Best Buy's Tiers of Loyalty Program Memberships,

Best Buy Financing Available to Best Buy Cardholders
In Addition to Deferred Interest Financing, Best Buy Offers Reduced Interest Financing
Best Buy Electronics Sales Growing at Pre-Pandemic Rates
Table 4-1. Best Buy Revenue, 2021-2023 ($ billion)
New Revenue Stream Harnessing Geek Squad Tech Skills for Healthcare Market
Best Buy Health
TJ MAXX

Table 4-2. Have/Used TJX Rewards Store Credit Card in Last 30 Days,

J.CREW
Figure 4-2. J.Crew Passport
KOHL'S
Overview
Kohl's Card Penetration and Frequency of Use

Table 4-3. Kohl's Store Credit Card: Ownership and Frequency of Use in Last 30 Days,

Managing-to-Cost has Led to Lower Staffing, Fewer "Deals" and an Unfocused Strategy
Baby R Us Next Attempt to Return to Profitability
Kohl's PLCC
Figure 4-3. Kohl's Credit Card Revenue, 2020-2023 ($ million)
Kohl's Rapidly Converting PLCC Cards to Co-branded Cards
Table 4-4. Kohl's Net Sales and Private Label Credit Card Revenue, 2020-2023 ($ billion)
Kohl's and Sephora
Loyalty Built on Discounts and Frequent Communication
Rewards Program Drives Revenue
The Kohl's App: Driving Sales Lift
TARGET
Overview
Table 4-5. Target Key Financial Metrics and PLCC Performance, 2020-2023 ($ billion)
Target Strategy
Converting its 165 Million Customer Visits to Loyalty Programs

Table 4-6. Target Store Credit Card: Ownership and Frequency of Use in Last 30 Days,

Figure 4-4. Target Circle
Rebranding All Loyalty Programs and Cards as "Circle"

Figure 4-5. Tiers of Target Circle Loyalty Program,

Target Uses Its PLCC as its Foundational Relationship Platform
Figure 4-6. Target Total Revenue, 2019-2023 ($ billion)
AMAZON
Overview
Figure 4-7. Amazon Prime Store Card
Amazon Secured Card

Table 4-7. Amazon Store Card: Ownership and Frequency of Use in Last 30 Days,

CHAPTER 5: OWNERSHIP OF PLCC AND MAJOR CREDIT & DEBIT CARDS

OVERVIEW
All Consumers
Table 5-1. Ownership of Major Credit/Debit Card and PLCCs, All Consumers, 2021-2024
Ownership by Age Range
Table 5-2. Ownership of Major Credit/Debit Card and PLCCs Among Adults 18-34 Years Old, 2021-
2024
Table 5-3. Ownership of Major Credit/Debit Card and PLCCs Among Adults 25-54 Years Old, 2021-
2024
Ownership by Principal Shopper
Table 5-4. Ownership of Major Credit/Debit Card and PLCCs Among Principal Shoppers, 2021-2024
Ownership by Gender
Table 5-5. Ownership of Major Credit/Debit Card and PLCCs Among Men, 2021-2024
Table 5-6. Ownership of Major Credit/Debit Card and PLCCs Among Women, 2021-2024