Credit cards in Spain account for 26% of the total number of cards in circulation but only for 8% of the total payment cards spend. Credit cards have never taken off in Spain – with around 18 million credit cards in circulation in 2015, the penetration stands at 40 cards per 100 inhabitants.
Amid the economic crisis of 2008 net credit card loss rates rose sharply and since the high unemployment rates affected the ability of Spanish consumers to pay their debt. The country’s credit card issuers responded by increasing interest rates and card fees to compensate for lending risk and reduced merchant revenues. The loss rate has since decreased while the credit card debt has gradually increased from an estimated €13.4bn in 2010 to €15.5bn in 2015.
With the share of Spanish card holders likely to switch to a new credit card in the next year being 12%, to maximise their opportunity for acquisition, providers should target switchers through no annual fee/ low annual fee cards and discounts at retailers, since they are the most important features of credit card choice among the Spanish consumers. While annual fee is a standard feature of Spanish credit cards, a number of banks, including Barclaycard, WizInk, BBVA’s online bank Uno-e, and supermarkets (Carrefour, Ikea, Eroski) offer credit cards with no annual fees.
The research from Verdict Financial also finds that the key acquisition channel for primary credit cards in Span is bank branch with half of Spanish credit card holders applying for their credit cards using this channel. For comparison, 19% of the UK consumers apply for credit cards through bank branches.