Starter Credit Cards Market Expected to Reach $790.3 Billion by 2032

According to a new report published by Allied Market Research, titled, “Starter Credit Cards Market," The starter credit cards market size was valued at $293.64 billion in 2022, and is estimated to reach $790.3 billion by 2032, growing at a CAGR of 10.6% from 2023 to 2032. Starter credit cards are designed for individuals with little to no credit history to help them build responsible financial habits. Unlike subprime cards, which target those with significant credit issues and carry higher rates and fees, starter cards have more lenient approval requirements. These cards typically feature minimal rewards, if any, and less favorable terms compared to credit cards for those with good or excellent credit. Starter credit cards often come with lower credit limits and higher interest rates or fees, allowing issuers to manage the risk of lending to credit newcomers. By focusing on responsible credit use, such as timely payments, users can establish a solid credit profile without the distraction of rewards or bonuses. 

The starter credit cards market share is influenced by the increasing emphasis on financial inclusion. Governments and financial institutions are working to bring more individuals into the formal financial sector, particularly those with limited or no credit history. Starter credit cards play a pivotal role in this effort, offering a pathway for younger demographics or individuals with lower incomes to access financial services and establish a credit history. For example, in June 2022, Credit One Bank launched a new American Express card that offers those in need of rebuilding their credit the ability to earn a flat rate of 1% cash back on every purchase, for a $39 annual fee. In addition to its straightforward rewards rate, the Credit One Bank Amex offers a decent suite of benefits for a credit-building card.

As a result, the demand for starter credit cards is driven by the broader goal of fostering financial inclusivity and providing opportunities for those who do not qualify for traditional credit cards. In addition, Advancements in digital technology have played a key role in shaping starter credit cards market trends, especially with the rise of online banking, mobile apps, and digital payments that streamline application processes.. Rise in online banking, mobile apps, and digital payments has streamlined the application processes, approval mechanisms, and overall account management for starter credit cards. This technological shift caters to the preferences of the modern consumer, making it easier for financial institutions to engage with individuals seeking their best first credit card. The convenience offered by digital platforms has become a key driver in the growth of the starter credit cards market, aligning with the evolving expectations of consumers in the digital age. 

The market faces challenges, including limited credit limits. This poses a potential barrier for individuals seeking accessible credit, as the terms may be less favorable as compared to traditional credit cards. Furthermore, the delicate balance of credit risk management, as stringent practices may lead to rejections for those with limited credit history restrain the starter credit cards market growth. On the contrary, leveraging advanced analytics and alternative data sources presents an starter credit cards market opportunity for financial institutions to assess creditworthiness more accurately, potentially expanding the market reach of starter credit cards in the upcoming years.

Region-wise, North America dominated the starter credit cards market in 2022. This is attributed to the strong presence of major banks, coupled with a high rate of financial literacy, supports the adoption of credit cards, especially among individuals looking to build or improve their credit scores, which drives the segment growth. However, Asia-Pacific is expected to be the fastest-growing region during the forecast period. This is attributed to the increasing use of smartphones and mobile banking platforms has made it easier for consumers, especially first-time cardholders, to apply for and manage credit cards.

Key findings of the study 

• By type, the secured credit card segment held the largest share in the starter credit cards market in 2022.
• By annual fee, the no annual fee card segment held the largest share in the starter credit cards industry in 2022.
• By provider, the NBFCs segment is expected to show the fastest market growth during the starter credit cards market forecast period.
• Region-wise, North America held the largest market share in 2022. However, Asia-Pacific is expected to witness the highest CAGR during the forecast period.

The key players profiled in the Starter credit cards market analysis are American Express Company, Capital One, Deserve, Credit One Bank, N.A., Citigroup Inc., JPMorgan Chase & Co., Discover Bank, U.S. Bank, OpenSky, and Bank of America Corporation. These players have adopted various strategies to increase their market penetration and strengthen their position in starter credit cards industry.