After using federal relief to pay off $83 billion in credit card debt in 2020, American consumer debt has back-peddled; reaching $4.82 trillion in February 2023, a 5% YoY increase, per a February report by the Federal Reserve. What’s more, consumers are struggling to pay back this debt, as the average credit card interest rate is 21%—the highest rate American credit card owners have seen in decades.

As these risks persist, credit card issuers and networks will be forced to rethink their credit card ad budget, reward strategies, and target audience. Here, we’ll review data and trends for the credit card industry in 2023; delving into the challenges credit card marketers are currently up against, and how they can leverage market opportunities to enable future success. 

Gen Z and how they will impact credit card data

The Gen Z demographic will be a major focus for the credit card industry this year, as Gen Z is poised to surpass Gen X in the number of US digital buyers by 2025, per the credit card spending data provided in Insider Intelligence’s February forecast. However, as Gen Zers conduct research before making buying decisions and expect personalization beyond broad awareness campaigns, marketers are refining their tactics in order to win over this audience.

To that end, strategists are further customizing their offerings—presenting cardholders with flexible payment options and offering them the ability to select a top reward category. What’s more, strategists are aligning their messaging and offerings with the causes that resonate most with the Gen Z audience. For example, customers can use Citi ThankYou points to donate to their favorite charity or select credit cards affiliated with their favorite sports team.

As TikTok is expected to overtake Snapchat as Gen Z’s most used social media platform in 2024, credit card companies will race to this platform to engage this audience. However, having a blank TikTok account will not suffice when it comes to winning over the 45.7 million US Gen Z users currently on this platform. Credit card companies—including Mastercard and American Express—are working to maintain an active presence on TikTok, by way of partnerships with influencers on sponsored videos.

Creating efficient credit card ad strategies

After years of massive increases in digital ad spend, credit card issuers and networks are focusing their efforts on creating efficiencies—including trimming their credit card ad budget and preparing for additional cuts should the recession worsen.

One step marketers are taking to improve efficiencies is investing in proprietary software to measure ROI and demonstrate the value of their marketing initiatives. Credit card marketers are also leveraging AI to make marketing materials more targeted to specific segments, such as those in a specific geographic region.

Credit card issuers will focus on less risky segments in 2023 and mainly on those with higher spending power. For example, Capital One plans to target heavy spenders and the higher end of the subprime market to elicit card spend, per its Q4 2022 earnings call.

Inflation is molding credit card incentives

Record-breaking inflation and ever-increasing interest rates are reducing the disposable income of middle-income consumers, and are therefore, causing this segment to be more cost-conscious and increasingly focused on getting the most value from their credit cards. To satiate this consumer demand, credit card issuers are taking steps to attract consumers to their lower-tier and non-premium cards. 

One way they are doing this is by increasing rewards value on essential goods such as groceries, while decreasing value on nonessentials like travel. For example, Mastercard has partnered with fintech Bilt, on a card that gives customers cash back when they make rent payments. 

In addition, credit card marketers are adjusting campaign messaging to focus on cost-cutting initiatives—including low-introductory rates and no-fee balance transfers, and features that help with everyday spending—such as the ability for customers to redeem cash rewards when making a direct deposit. 

As high inflation rates and regulatory pressure from the federal government are expected to continue through the rest of 2023, banks may be wise to set aside cash in the case of delinquencies. That said, efficient credit card ad strategies and the right incentives can offer credit card companies a convenient way to collect payments, while affording cardholders more time to ultimately pay off their debt.