Starter Credit Cards Market Research, 2032
The global starter credit cards market was valued at $293.6 billion in 2022, and is projected to reach $790.3 billion by 2032, growing at a CAGR of 10.6% from 2023 to 2032.
Starter credit cards are financial tools designed for individuals with limited or no credit history. These cards have more lenient approval requirements compared to traditional credit cards and are aimed at helping users establish and build a credit profile. Starter credit cards come with lower credit limits and may have higher interest rates and fees as a means for financial institutions to mitigate risk associated with a borrower's limited credit history.
Key Takeaways:
- 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 forecast period.
- Region-wise, North America held the largest starter credit cards market share in 2022. However, Asia-Pacific is expected to witness the highest CAGR during the forecast period.
The starter credit cards market 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. 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, the advancements in digital technology have transformed the starter credit cards industry. The rise of 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 size, aligning with the evolving expectations of consumers in the digital age.
The market faces challenges, including the restraint of limited credit limits and higher fees associated with starter credit cards. This poses a potential barrier for individuals seeking accessible credit, as the terms may be less favorable 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 opportunity for financial institutions to assess creditworthiness more accurately, potentially expanding the market reach of starter credit cards in the upcoming years.
The report focuses on growth prospects, restraints, and trends of the starter credit cards market forecast. The study provides Porter’s five forces analysis to understand the impact of various factors such as bargaining power of suppliers, competitive intensity of competitors, threat of new entrants, threat of substitutes, and bargaining power of buyers on the starter credit cards market outlook.
Segment Review
The global starter credit cards market is segmented into type, annual fee, provider, and region. On the basis of type, the market is categorized into student credit card, secured credit card, and unsecured starter credit card. On the basis of annual fee, the market is bifurcated into no annual fee card and low annual fee card. On the basis of provider, the market is differentiated into banks, NBFCs, credit unions, and others. On the basis of region, it is analyzed across North America (the U.S., and Canada), Europe (the UK, Germany, France, Italy, Spain, and rest of Europe), Asia-Pacific (China, Japan, India, Australia, South Korea, and rest of Asia-Pacific), Latin America (Brazil, Argentina, and rest of Latin America), and Middle East and Africa (GCC Countries, South Africa, and rest of Middle East and Africa).
On the basis of type, the secured credit card segment acquired a major share in the starter credit cards market in 2022. This is attributed to their accessibility for individuals with limited or poor credit histories. These cards require a security deposit, which serves as collateral and minimizes the risk for lenders, making them more willing to extend credit to those with lower credit scores. As a result, individuals who have difficulty qualifying for traditional unsecured credit cards use secured cards to build or rebuild their credit.
Region-wise, North America dominated the starter credit cards market in 2022. This is attributed to the region's robust financial infrastructure and widespread availability of banking services that make it conducive for the proliferation of credit card products, including those tailored for individuals with limited credit histories. Furthermore, the prevalence of digital banking and fintech innovations in North America has facilitated easier access to credit products, allowing financial institutions to reach a wider audience and offer starter credit cards with competitive terms. However, Asia-Pacific is expected to be the fastest-growing region during the forecast period. This is attributed to the region's rapidly expanding middle class and increasing urbanization that led to rising consumer demand for financial products, including credit cards, to facilitate spending and lifestyle needs.
Competition Analysis
Competitive analysis and profiles of the major players in the starter credit cards market include Discover Bank, American Express Company, Capital One, Deserve, Credit One Bank, N.A., Citigroup Inc., Bank of America Corporation, JPMorgan Chase & Co., U.S. Bank, and OpenSky. These players have adopted various strategies to increase their market penetration and strengthen their position in the starter credit cards industry.
Recent Partnerships in the Starter Credit Cards Market
- In March 2022, Zeta, a banking tech unicorn & provider of next-gen credit card processing to banks & fintechs, and Mastercard announced a 5-year global partnership. As part of the agreement, the firms were jointly to launch credit cards with issuers worldwide on Zeta’s modern, cloud-native, and fully API-ready credit processing stack. Mastercard has underscored the partnership by making a financial investment in Zeta.
- In December 2021, American Express in partnership with Nova Credit, expanded credit access to people from Brazil, Dominican Republic, Kenya, and Nigeria who have moved to the U.S. The growth of this first-of-its-kind digital capability enables newcomers from nine countries to use their international credit history to apply quickly and easily for personal American Express Cards.
Recent Product Launch in the Starter Credit Cards Market
- In January 2024, Chase launched a brand-new card for those looking to apply for their first credit card and start building credit: the Chase Freedom Rise. This credit builder card is for those with limited or no credit history. As of the card’s launch, the Chase Freedom Rise can only be obtained by physically going to a Chase branch and filling out an application there.
- 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 percent 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.
- In March 2022, Bank of America launched the Business Advantage Unlimited Cash Rewards Secured credit card, Business Advantage Secured Credit Line, and the Start a Business Center – its latest products and resources for entrepreneurs looking to start a small business or build their business’ credit history.
- In July 2021, Bank of America launched the Bank of America Unlimited Cash Rewards credit card, which allows clients to earn unlimited 1.5% cash back on all purchases. This new credit card is the latest among Bank of America’s suite of rewards cards, each designed to fit a variety of clients’ needs.
Market Landscape and Trends
According to research by RBR (a retail banking research consultancy), 50 percent of global card expenditure takes place in Asia Pacific, compared with just its 28 percent share of the number of payments. This is primarily due to the fact that in China, cards are used to withdraw cash more commonly than they are for payments. When Chinese customers use cards to purchase goods, it is typically for expensive items.
In addition, in November 2021, OpenSky, the digital banking division of Capital Bank, N.A., expanded its product offering with the addition of the OpenSky Visa Gold Card. The OpenSky Gold Card is an unsecured credit card that complements the highly rated OpenSky Secured Visa Credit Card, tagged by Forbes ADVISOR as a “good option to help rebuild your credit.” This new addition offers an uninterrupted experience for OpenSky customers who now more easily continue in their journey from secured to partially secured to unsecured credit card.
Top Impacting Factors
Financial Inclusion Initiatives
A major driving factor for the starter credit cards market is the increasing emphasis on financial inclusion. As governments and financial institutions strive to bring more individuals into the formal financial sector, starter credit cards offer a viable entry point for those with limited or no credit history. This is particularly relevant for younger demographics or individuals with lower incomes who may not qualify for traditional credit cards. The push for financial inclusion creates a growing market for starter credit cards, providing individuals with the opportunity to build credit and access financial services.
Digitalization and Technology
The advancements in digital technology have significantly impacted the starter credit cards market. With the rise of online banking, mobile apps, and digital payments, issuing and managing starter credit cards has become more efficient and accessible. Technology enables quicker application processes, instant approvals, and seamless account management, making it easier for financial institutions to cater to the needs of individuals seeking their first credit card. The convenience offered by digital platforms contributes to the growth of the starter credit card market as it aligns with the preferences of tech-savvy consumers.
Limited Credit Limits and High Fees
A significant restraint in the starter credit card market is the tendency for these cards to come with lower credit limits and higher fees compared to traditional credit cards. While these limitations are in place to mitigate risk for issuers, they deter potential users. However, this restraint presents an opportunity for market players to innovate by developing products with more favorable terms, addressing the demand for accessible credit without imposing excessive fees.
Key Benefits for Stakeholders
- This report provides a quantitative analysis of the market segments, current trends, estimations, and dynamics of the starter credit cards market analysis from 2022 to 2032 to identify the prevailing starter credit cards market opportunity.
- Market research is offered along with information related to key drivers, restraints, and opportunities.
- The Porter's five forces analysis highlights the potency of buyers and suppliers to enable stakeholders to make profit-oriented business decisions and strengthen their supplier-buyer network.
- In-depth analysis of the starter credit cards market segmentation assists to determine the prevailing starter credit cards market opportunities.
- Major countries in each region are mapped according to their revenue contribution to the market.
- Market player positioning facilitates benchmarking and provides a clear understanding of the present position of the market players.
- The report includes the analysis of the regional as well as starter credit cards market trends, key players, market segments, application areas, and market growth strategies.
Starter Credit Cards Market Report Highlights
| Aspects | Details |
 Market Size By 2032 | USD 790.3 billion |
 Growth Rate | CAGR of 10.6% |
 Forecast period | 2022 - 2032 |
 Report Pages | 265 |
 By Type |
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 By Annual Fee |
|
 By Provider |
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 By Region |
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 Key Market Players | Citigroup Inc., OpenSky, U.S. Bank, Deserve, JPMorgan Chase & Co., Credit One Bank, N.A., Capital One, Bank of America Corporation, Discover Bank, American Express Company |
Analyst Review
Starter credit cards are designed to help people with zero, thin, or bad credit establish a good credit history and learn responsible card use. Top features include waived fees, rewards for setting a routine of timely payments, low barriers to becoming a cardholder, and lenient interest rates. Some starter credit cards offer opportunities to upgrade to new products and better terms and conditions if the user consistently pays their bills on time.
Key players in the starter credit cards market adopted partnership, acquisition, and product launch as their key development strategies to sustain their growth in the market. For instance, in January 2024, Financial services company College Ave launched a secured credit card for college students. The new Ambition Mastercard is designed to help students who are 18 years and older build and establish a positive credit history. The card joins the other products and services offered by College Ave, which has partnered with FIS-owned embedded finance platform Bond to develop financial solutions for college students and their families. Therefore, such strategies adopted by key players propel the growth of the starter credit cards market.
The COVID-19 pandemic exerted a discernible impact on the starter credit cards market, reflecting the broader economic disruptions of the global crisis. The lockdowns and economic uncertainties induced by the pandemic led to a shift in consumer behavior, with individuals becoming more conservative in their financial decisions. This caution, coupled with widespread job losses and income disruptions, resulted in a decreased appetite for credit among consumers, particularly those considering starter credit cards. Financial institutions, faced with heightened risk considerations, adjusted their lending practices, implementing stricter criteria for credit approval. The reduced demand for credit and the tightened lending environment collectively contributed to a slowdown in the starter credit cards market as both consumers and financial institutions navigated the challenges posed by the pandemic.
The key players in the starter credit cards market include Discover Bank, American Express Company, Capital One, Deserve, Credit One Bank, N.A., Citigroup Inc., Bank of America Corporation, JPMorgan Chase & Co., U.S. Bank, and OpenSky. These players have adopted numerous strategies to increase their marketplace penetration and strengthen their position in the starter credit cards market.
The size of the global starter credit cards market was valued at $293.64 billion in 2022 and is projected to reach $790.27 billion by 2032.
The key players operating in the global starter credit cards market include Discover Bank, American Express Company, Capital One, Deserve, Credit One Bank, N.A., Citigroup Inc., Bank of America Corporation, JPMorgan Chase & Co., U.S. Bank, and OpenSky.
Partnership and product launch are the key strategies opted by the operating companies in this market.
Leveraging advanced analytics and alternative data sources presents an opportunity for financial institutions to assess creditworthiness more accurately, potentially expanding the market reach of starter credit cards in the upcoming years.
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