How Banks Can Reengage the 53 Million Credit Outsiders

A significant segment of the U.S. population — approximately 53 million individuals — remains outside the traditional credit card ecosystem.

These “credit card outsiders” encompass diverse groups, each with unique financial behaviors and preferences. Understanding these distinctions is crucial for financial institutions (FIs) because reengaging credit card outsiders presents a substantial opportunity.

The new Consumer Credit Access Report from PYMNTS Intelligence in collaboration with Atelio identifies four primary personas among credit card outsiders. By understanding the diverse profiles within these four groups and tailoring products to meet their specific needs and concerns, FIs can foster financial inclusion and expand their customer base.

Why Traditional Credit Cards Don’t Work for These Consumers

Each of the four groups of credit outsiders identified by PYMNTS Intelligence exhibits distinct motivations and concerns regarding credit usage.

Second Chancers are individuals who previously owned a credit card and are interested in obtaining one again.

Credit Curious are those who have never had a credit card but are interested in acquiring one.

Gone for Goods are former credit card holders who have no interest in reentering the credit card market.

Never-Nevers, as the name implies, are individuals who have never possessed a credit card and have no desire to obtain one.

Crucially for FIs is that contrary to the assumption that credit card outsiders avoid all credit products, 62% hold at least one type of credit account.

Store cards and buy now, pay later (BNPL) plans are particularly prevalent, indicating a preference for accessible, short-term credit solutions over traditional loans. Notably, “Second Chancers” and the “Credit Curious” are more inclined to utilize these alternatives, suggesting their openness to credit products that offer flexibility and immediate utility.

Secured credit cards also emerged as a promising tool to attract credit card outsiders. Approximately 29% of outsiders express interest in secured credit cards, while 28% are interested in traditional credit cards. BNPL services also garner significant interest at 27%. The appeal of secured credit cards lies in their ability to provide immediate credit access while enabling users to build or rebuild their credit profiles.

Read more: What Credit Card Outsiders Want — and How FIs Can Bring Them Back

To effectively reengage credit card outsiders, FIs should consider the specific needs and concerns of each segment. For example, for Second Chancers, FIs can emphasize the role of secured credit cards in rebuilding credit scores and providing a safety net for emergencies; while for the Credit Curious, FIs can highlight the benefits of establishing credit history and the potential for rewards and discounts.

Trust is a critical factor in reengaging credit card outsiders. FIs can build trust by offering clear communication, transparent terms and tools that help consumers manage their credit responsibly.

Particularly for Gone for Goods and Never-Nevers, addressing concerns around debt and financial stability is crucial.

Addressing security concerns across all outsider segments is also vital, as 16% of outsiders worry about fraud, and 14% fear data theft. Providing robust security measures and educating consumers on these protections can alleviate such fears.