A significant shift in consumer loyalty to traditional credit cards has emerged in the UK, as rising demand for personalisation and financial flexibility are driving people to consider alternative financial products. The findings are detailed in Marqeta‘s latest report, the 2024 State of Credit, which surveyed 3,000 people globally, including 1,000 from the UK. Marqeta, a Nasdaq-listed financial technology firm specialising in modern card issuing solutions, found that 48% of UK respondents currently hold credit cards that do not offer rewards or loyalty benefits – a trend that has prompted calls for more personalised options.
More than half (53%) of UK consumers said their credit card had helped them manage finances over the past year, but the lack of perks is pushing many to consider alternatives. The report found that 43% of those using multiple cards would be encouraged to increase usage if better rewards were offered. Marqeta’s European and UK CEO, Marcin Glogowski, noted that financial services need to keep pace with the demand for customisation: “Financial services companies must adapt to the shift towards highly personalised, flexible financial experiences. This is what consumers are now demanding.”
Another trend shaping UK spending habits is the rise in Buy Now, Pay Later (BNPL) services, which have become a critical budgeting tool for many. Sixty-three percent of BNPL users in the UK said the service had helped them make ends meet in the past 12 months, with a notable 70% of users aged 44-59 expressing similar sentiments. BNPL’s appeal is further underscored by its convenience and interest-free features, according to 43% and 39% of users, respectively.
As a result, many consumers are turning away from traditional credit card loyalty models in search of new offers, particularly among younger consumers. Marqeta found that 45% of millennials are considering applying for a credit card in the next 12 months, enticed by the potential for benefits like a cash-back offer of £100 or more (47%) and zero-interest periods for the first year (40%). Meanwhile, among the 26% who stopped using a credit card in the last year, 27% reported switching to a new product that better met their needs.
Embedded finance, or financial services offered through non-financial providers, has also made inroads into the UK market, as demonstrated by the 30% of UK consumers who now own a retailer-affiliated credit card – a 25% increase from last year. This trend reflects the growing demand for flexibility and rewards outside traditional banking, including emerging options like payment cards that offer debit, credit, and BNPL functions within a single product, an option favoured by 44% of respondents.
While demand for alternative financing solutions rises, consumers are also grappling with high credit card interest rates. The report cites the average annual percentage rate (APR) on credit cards, which rose from 31.8% to 35.5% in the past year. Nearly a third (30%) of UK respondents said their credit card debt was higher than it was a year ago, and 74% reported difficulties meeting monthly minimum payments over the past year.
Reflecting on these trends, Glogowski suggested that as consumers increasingly expect digital, personalised services, financial providers must rethink their approaches to maintain relevance in a changing market.
