African Americans and Credit, Debit and Prepaid Cards: Valuable but Overlooked

African Americans and Credit, Debit and Prepaid Cards: Valuable but Overlooked

Despite a constant search for new revenue and clients, the credit, debit and prepaid card industries have largely overlooked the African American market as an attractive segment. The recent and understandable enthusiasm for the opportunities afforded by the Hispanic market has eclipsed the strong growth potential of the 37.5 million strong African American market, which enjoys higher household income levels than Latinos. In addition, African Americans claim great receptivity to market communications from financial services companies.

African American income levels are rising faster than average with close to two million African American households registering incomes of at least $75,000. The aggregate income of most affluent Black families is at $116 billion and climbing. The number of African American homeowners has grown by a third in the last decade.

There are comparatively few affinity, co-branded and reward cards targeted specifically to the African American community. This is true for both credit and debit cards. However, the high level of unbanked and underbanked helps explain the introduction of affinity and co-branded prepaid cards marketed primarily to the African American community.

How You Will Benefit from this Report

African Americans and Credit, Debit and Prepaid Cards: Valuable but Overlooked, a new report from Packaged Facts, offers an in-depth look at card usage patterns among African Americans. The report provides an overview of the African American community in the U.S., including a look at financial trends in the African American consumer market, and key demographic characteristics of the African American population. In addition, the study provides extensive analysis of attitudinal drivers, credit and debit card brand preference as well as monthly versus yearly credit and debit card usage. Lastly, the report explores the growth factors, insights and risks associated with intensive targeting of African-American users.

This report will help:

• Marketing Managers identify market opportunities and develop targeted promotion plans.


• Research and development professionals stay on top of competitor initiatives and explore African American attitudes and behavior re: card products.


• Advertising agencies working with clients in the card industry understand the African American buyer to develop messages and images.


• Business development executives understand the dynamics of the market and identify possible partnerships.


• Information and research center librarians provide market researchers, brand and product managers and other colleagues with the vital information they need to do their jobs more effectively.

Chapter 1 Executive Summary
• Methodology and Scope
• African American Demographics
o African American Population Totals 37.5 Million and Growing
o Multiracial
o African Americans More Dispersed than Hispanics
o Foreign-Born Black Population Shows Rapid Increase
o Incomes of African Americans Continue to Outpace Hispanics’
o Over 2 Million African American Households Have Incomes of $75,000 or
o More
o Aggregate Income of Most Affluent Black Households Reaches $116 Billion
o and Will Reach $981 Billion in 2010
o Same Educational Levels But Different Incomes
o African Americans Influential in Younger Age Groups
o Females Relatively More Numerous
o College Enrollment Tops 2 Million, Black Women More Likely to Attend
o Nearly 4.2 Million African Americans Have Bachelors Degree or More
o Black Women’s Educational Attainment Outpaces Black Men’s
• African American Financial Attitudes and Behaviors
o Life Insurance and Cash are Most Prized
o Financial Advertising and News Valued
o African American Financial Attitudes
o Almost One in Five African Americans Say Their Friends Ask Them for Financial Advice
• African American Financial Practices
o Payments
o Domestic Remittances
o A lower level of Banking among Blacks
o Students
• Unbanked & Underbanked
o Definitions
• Discrimination
• African American Credit Card Use
o African American Credit Card Use Versus Other U.S. Populations
o Level of Education Affects Use
o Personal Income Level Show Similar Pattern to Education
o A Look at Credit Card Use by Socio-Economic Level
o A Look at Credit Card Use by Marital Status
o Link between Life Insurance and Credit Card Use
• Credit Card Use By Brand
o The Most Popular Card Brands
o Popular Non-Bank Cards
• African American Credit Card Payment Practices
o Outlook for Subprime Credit Cards
• African American Debit Card Use
o Definition of Terms and Forecast
o Debit Cards Lead Credit Cards in the African American Market
o The Link Between Cash Preference and Debit Card Use
o Greater Educational Attainment Means Higher Monthly Debit Card Use
o Brand Preference
• Prepaid Cards
o Prepaid Cards Poised to Break Out
o Prepaid Debit Poised to Break Out
o Current Players in the African American Prepaid Card Market
o Overdrafts
o Government-Assistance Debit Cards
• Credit Unions as Conduits
• Wireless Players
• Growth and Risk Factors in the African American Credit, Debit and Prepaid Card Markets
o Growth Factors
o Hispanic Marketing Fever
o Very Little Card Marketing Specific to African Americans
o Potential for African American Affinity, Co-branded Cards, Rewards
o Programs
o Establish Partnerships with Other Financial Service Providers
o Potential of Mobile Payments Technologies Given High Cellphone Feature
o Use by African Americans
o Cell Phones Just as Common
o Need for Partnerships with Media Outlets that Target African Americans
• Risks
o Regulatory and Reputation Risks


Chapter 2 Demographic Overview of African Americans
• Methodology
• African American Population Totals 37.5 Million
• Black Population Continues to Grow at Above-Average Rate
• African American Population Will Exceed 40 Million in 2010
• Self-reporting of Multiracial Status Declines
• African Americans More Dispersed than Hispanics
• Fast-Growing African American Populations Found throughout the United States
• Southern States Have Highest Percentage of African Americans
o Foreign-Born Black Population Shows Rapid Increase
• The African American Community, Financially
o African American Income Rising Faster than Average
• Incomes of African Americans Continue to Outpace Hispanics’
• Over 2 Million African American Households Have Incomes of $75,000 or More
• Aggregate Income of Most Affluent Black Households Reaches $116 Billion
• African American Buying Power Will Reach $981 Billion in 2010
• Same Educational Levels, But Different Incomes
• Age and Gender
o African Americans Influential in Younger Age Groups
o Females Relatively More Numerous
o College Enrollment Tops 2 Million
o Black Women More Likely to Attend College
o Nearly 4.2 Million African Americans Have Bachelors Degree or More
o Black Women’s Educational Attainment Outpaces Black Men’s
• Health Insurance Coverage


Chapter 3 African American Financial Services Attitudes and Practices
• Life Insurance and Cash are Most Prized
• A Love of Life Insurance
• Credit Cards and Life Insurance
• A Preference for Cash
• Open to Financial Services Advertising and Interested in Business News
• A Sense of Greater Financial Insecurity
• Friends ask for financial advice
• Aspirational African Americans
• When the Whole Is Less Than The Sum of the Parts
• African American Financial Practices
• Payments
• Domestic Remittances
• Credit Monitoring
• A lower Level of Banking Among Blacks
• Students
• Unbanked & Underbanked
• Definitions
• Who Are the Underbanked?
• Exchanges*
• Discrimination
• Automotive Loan Mark-Ups
• Subprime Mortgages
• A history of discrimination, not surprisingly, breeds distrust.


Chapter 4 African American Credit Card Use and Brand Preference
• Current Credit Card Market
• African American Credit Card Use Versus Other U.S. Populations
• Level of Education Affects Use
• Personal Income Level Show Similar Pattern to Education
• Household Income Same Pattern, Lower Penetration
o A Look at Credit Card Use by Socio-Economic Level
• A Look at Credit Card Use by Marital Status
• Link between Life Insurance and Credit Card Use
• The Most Popular Credit Card Brands
• Few Black Singles Own Credit Cards
• Popular Non-Bank Cards
• African American Credit Card Payment Practices
• Industry Outlook for Subprime Credit Cards
Chapter 5 African American Debit Card Use and Brand Preference
• Debit Cards Lead Credit Cards in the African American Market
• The link between cash preference and debit card use
• Gender Gap Explained
• Brand Preference
• Life Insurance and Debit Cards


Chapter 6 African American Prepaid Debit Poised to
• Break Out
o Market Size
o Packaged Facts Predicts $200 Billion on Prepaid Debit Cards in 2011
• Prepaid Debit Poised to Break Out
• Current Players in the African American Prepaid Card Market
• Pricing
• Overdrafts
• Government-Assistance Debit Cards
• Credit Unions as Conduits
• Wireless Players


Chapter 7 Growth Factors and Risks in the African American Credit, Debit and Prepaid Card Marketplace
• Growth Factors
• Hispanic Marketing Fever
• Very Little Branded Card Marketing Specific to African Americans
• Potential for African American Affinity, Co-branded Cards, Rewards programs
• Establish Partnerships with Other Financial Service Providers
• Potential of Mobile Payments Technologies Given High Cellphone Feature Use by African Americans
• Cell Phones Just as Common
o Source: Simmons Market Research Bureau, Spring 2005 National Consumer Survey; compiled by Packaged Facts
• Pilot Projects
• Domestic Remittances by Wireless
o Barriers to Mobile Financial Services Adoption
• Need for Partnerships with Media Outlets That Target African Americans
• Risks
o Regulatory and Reputation Risks