A Surge of Retail and T&E Credit Card Launches

Navigator Edition: August 2016
By: Ryan Douglas and Katrina Johnson

There has been a steady increase in credit card launch activity in recent years1. In 2016 alone, companies such as Ulta Beauty and Forever 21 have launched or announced an intent to roll out credit card programs, but the activity spans across different sectors. Keep in mind that the tracking chart in Figure 1 does not include transitions from one issuer to another, but it does show notable new credit card programs. Of the new credit card programs observed in 2016, ~85% were by companies with over $1 billion in sales (compared to ~40% in 2015). Figure 1 also shows that there has been a spike in new card programs in recent years. Most of the activity has been in the retail sector (ranging from regional furniture stores to large apparel brands). Given the size of the retail sector, it is not surprising that it accounts for most of the launch activity. However, the spike in program launches is not entirely attributable to retail as the T&E sector has accounted for a significant amount of new programs in this same period, which is particularly impressive given that there are far fewer airline and hotel chains than retailers in the U.S.

Figure 1: Notable Credit Card Partnership Program Launches

(not an exhaustive list)

Figure-1_Notable-Credit-Card-Partnership-Program-Launches-by-Sector_v2Note: The above represents de novo program launches observed by First Annapolis, and may not be all inclusive. It excludes program transitions / acquisitions and launches of a new credit product when an alternative credit product already existed.
Source: Company press releases, issuer websites, Yahoo Finance, Hoovers, First Annapolis Consulting analysis.

There are several market trends that explain this recent increase in new product launches. First and foremost is the improvement of the U.S. economy. Figure 2 illustrates the real GDP per capita and total consumer debt over the last 10 years. In 2013, the GDP per capita increased above pre-recession levels for the first time, and was followed by an increase in consumer’s willingness to take on more debt. There is a clear correlation between this economic turnaround in 2013 and the surge in new credit card product launches that started during the same timeframe.

Figure 2: Consumer Macroeconomic Trends

Figure 2_ Consumer Macroeconomic TrendsSource: New York Federal Reserve.

The past several years have also been a period of elevated and sustained profitability for issuers. Charge-off rates and funding costs are at all-time lows and profitability is high. Credit card issuers have strong capital positions to fuel growth. Another factor contributing to increased credit card program launches is the fact that retailers need to draw on every possible tool to compete in the current environment. For decades, credit card programs have been a driver of incremental sales and differentiated spend behavior, so more and more companies have been launching programs or investing in existing programs. Finally, competition in the credit card space is intense with many channels saturated. Issuers compete for card partnerships and, in effect, stimulate demand for new programs.

1  The number of program launches reflects notable programs observed by First Annapolis, and is not an exhaustive list.

For more information, please contact Ryan Douglas, Manager,, specializing in Credit Card Issuing.

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