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African American Credit, Debit and Prepaid Card Users: Undervalued and Overlooked


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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.

Report Methodology
Census Bureau data cited in this report include the March 2006, 2005 and 2004 Current Population Surveys as well as a number of updated estimates and analyses of the African American population released by the Census Bureau in 2005. Other U.S. Government sources include the Consumer Expenditures Survey of the Bureau of Labor Statistics (BLS) and various data bases maintained by a range of other agencies including the U.S. Center for Education Statistics and the U.S. Department of Commerce.

Packaged Facts also relied on data compiled by Simmons Market Research Bureau (New York, NY) in its fall 2006 consumer survey, which is based on 24,467 respondents.

About the Author
Luis Clemens is a former CNN bureau chief who now specializes in reporting on multicultural marketing and media. His work has appeared in trade publications such as Broadcasting&Cable, Card Technology, Multichannel News and Prepaid Trends. Clemens is widely considered an expert on pay television networks targeting African American, Asian American and Latino audiences.

How You Will Benefit from this Report
African American Credit, Debit and Prepaid Card Users: Undervalued and 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
    • African American Population Totals 37.5 Million and Growing
    • Multiracial
    • African Americans More Dispersed than Hispanics
    • Foreign-Born Black Population Shows Rapid Increase
    • 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
    • and Will Reach $981 Billion in 2010
    • Same Educational Levels But Different Incomes
    • African Americans Influential in Younger Age Groups
    • Females Relatively More Numerous
    • College Enrollment Tops 2 Million, Black Women More Likely to Attend
    • Nearly 4.2 Million African Americans Have Bachelors Degree or More
    • Black Women’s Educational Attainment Outpaces Black Men’s

  • African American Financial Attitudes and Behaviors
    • Life Insurance and Cash are Most Prized
    • Financial Advertising and News Valued
    • African American Financial Attitudes
    • Almost One in Five African Americans Say Their Friends Ask Them for Financial Advice

  • African American Financial Practices
    • Payments
    • Domestic Remittances
    • A lower level of Banking among Blacks
    • Students

  • Unbanked & Underbanked
    • Definitions

  • Discrimination
  • African American Credit Card Use
    • African American Credit Card Use Versus Other U.S. Populations
    • Level of Education Affects Use
    • Personal Income Level Show Similar Pattern to Education
    • 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

  • Credit Card Use By Brand
    • The Most Popular Card Brands
    • Popular Non-Bank Cards

  • African American Credit Card Payment Practices
    • Outlook for Subprime Credit Cards

  • African American Debit Card Use
    • Definition of Terms and Forecast
    • Debit Cards Lead Credit Cards in the African American Market
    • The Link Between Cash Preference and Debit Card Use
    • Greater Educational Attainment Means Higher Monthly Debit Card Use
    • Brand Preference

  • Prepaid Cards
    • Prepaid Cards Poised to Break Out
    • Prepaid Debit Poised to Break Out
    • Current Players in the African American Prepaid Card Market
    • Overdrafts
    • Government-Assistance Debit Cards

  • Credit Unions as Conduits
  • Wireless Players
  • Growth and Risk Factors in the African American Credit, Debit and Prepaid Card Markets
    • Growth Factors
    • Hispanic Marketing Fever
    • Very Little 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
    • Need for Partnerships with Media Outlets that Target African Americans

  • Risks
    • 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
    • Table 2-1 Population Growth, African American vs. Other Population
    • Groups, April 2000-2004 (in thousands)

  • African American Population Will Exceed 40 Million in 2010
    • Table 2-2 Projected Population Growth, African American vs. Other Population Groups, 2005 vs. 2010 (in thousands)

  • Self-reporting of Multiracial Status Declines
  • African Americans More Dispersed than Hispanics
    • Table 2-3 States with Largest Black, Hispanic and White Populations,
    • 2004 (in thousands)

  • Fast-Growing African American Populations Found throughout the United States
    • Table 2-4 States with Fastest-Growing African American Populations, 2000-2004 (in thousands)

  • Southern States Have Highest Percentage of African Americans
    • Table 2-5 States with Highest Percentage of African Americans, 2005
    • Foreign-Born Black Population Shows Rapid Increase
    • Table 2-6 Ancestry and Place of Birth of Foreign-Born African Americans, 2004 (in thousands)

  • The African American Community, Financially
    • African American Income Rising Faster than Average
    • Table 2-7 Aggregate Personal and Household Income, African Americans vs. Other Population Groups, 1984 vs. 2004 (in millions)

  • Incomes of African Americans Continue to Outpace Hispanics’
    • Table 2-8 Mean Income of People 15 Years and Over, African Americans vs. Other Population Groups, 2004
    • Table 2-9 Income per Household Member, African Americans vs. Other Population Groups, 1992 vs. 2004
    • Table 2-10 Mean Household and Family Income, African Americans vs. Other Population Groups, 2004
    • Table 2-11 Mean Income of Families by Type, African Americans vs. Other Population Groups, 2004

  • Over 2 Million African American Households Have Incomes of $75,000 or More
    • Table 2-12 Distribution of Total Money Income of Households, African Americans vs. Other Population Groups, 2005 (in thousands)
    • Table 2-13 Distribution of Income of Married-Couple Families, African American vs. All Married-Couple Families, 2005 (in thousands)

  • Aggregate Income of Most Affluent Black Households Reaches $116 Billion
    • Table 2-14 Mean Income and Aggregate of Most Affluent African American Families, 2004

  • African American Buying Power Will Reach $981 Billion in 2010
    • Table 2-15 Projected Growth in African American Buying Power, 2005-2010

  • Same Educational Levels, But Different Incomes
    • Table 2-16 Income in 2005 by Educational Attainment of the Population 18 Years and Over, by Age, Sex, Race Alone and Hispanic Origin: 2006 (in thousands)

  • Age and Gender
    • African Americans Influential in Younger Age Groups
    • Table 2-17 Population by Selected Age Group, African Americans vs. Other Population Groups, 2004 (in thousands)
    • Table 2-18 African Americans as Percent of Total Population by Selected Age Group, July 2004 (in thousands)
    • Females Relatively More Numerous
    • Table 2-19 Population by Selected Age Group, African Americans vs. Other Population Groups, 2004 (in thousands)
    • College Enrollment Tops 2 Million
    • Table 2-20 College Enrollment of the Population 18 Years and Over by Age Group, African Americans vs. All People, 2004 (in thousands)
    • Black Women More Likely to Attend College
    • Table 2-21 College Enrollment of African Americans 18 Years and Over
    • by Age Group and Gender, 2004 (in thousands)
    • Table 2-22 Females as Percent of Total College Enrollment by Age
    • Group, African American vs. All Women, 2004 (in thousands)
    • Nearly 4.2 Million African Americans Have Bachelors Degree or More
    • Table 2-23 Educational Attainment of the Population 15 Years and Over Race and Ethnicity, 2006 (in thousands)
    • Black Women’s Educational Attainment Outpaces Black Men’s
    • Table 2-24 Educational Attainment of Employed African Americans,
    • 18 Years and Over, by Gender, 2005 (in thousands)

  • Health Insurance Coverage
    • Table 2-25 Health Insurance Coverage by Race and Ethnicity, 2005 (in thousands)

Chapter 3 African American Financial Services Attitudes and Practices

  • Life Insurance and Cash are Most Prized
  • Table 3-1 Attitudes Toward Spending Money: Blacks versus Whites, Hispanics and Asians, 2006 (U.S. Adults)
  • Table 3-2 Attitudes Among Blacks Toward Spending Money: By Gender, Marital Status and Educational Attainment, 2006 (African-American Adults)
  • Table 3-3 Attitudes Toward Saving Money: Blacks versus Whites, Hispanics and Asians, 2006 (U.S. Adults)
  • Table 3-4 Attitudes Among Blacks Toward Saving Money: By Gender, Marital Status and Educational Attainment, 2006 (African-American Adults)
  • Table 3-5 Attitudes Among Blacks Toward Spending Money: By Socio-economic Level, 2006 (African-American Adults)
  • Table 3-6 Attitudes Among Blacks Toward Saving Money: By Socio-economic Level, 2006 (African-American Adults)
  • A Love of Life Insurance
  • Credit Cards and Life Insurance
  • Table 3-7 Attitudes Toward Life Insurance: Blacks versus Overall
  • Population, 2006 (U.S. Adults)
  • Table 3-8 Attitudes Toward Life Insurance: Blacks versus Whites,
  • Hispanics and Asians, 2006 (U.S. Adults)

  • A Preference for Cash
    • Table 3-9 Attitudes Toward Paying in Cash: Blacks versus Whites,
    • Hispanics and Asians, 2006 (U.S. Adults)

  • Open to Financial Services Advertising and Interested in Business News
    • Table 3-10 Attitudes Toward Financial Ads and News: Blacks versus
    • Whites, Hispanics and Asians, 2006 (U.S. Adults)

  • A Sense of Greater Financial Insecurity
    • Table 3-11 Sense of Financial Security: Blacks by Gender versus Whites, Hispanics and Asians, 2006 (U.S. Adults)

  • Friends ask for financial advice
    • Table 3-12 Word-of-Mouth Advice on Financial Matters: Blacks versus Whites, Hispanics and Asians, 2006 (U.S. Adults)

  • Aspirational African Americans
    • Table 3-13 Attitudes Toward Financial Success: Blacks versus Whites, Hispanics and Asians, 2006 (U.S. Adults)

  • When the Whole Is Less Than The Sum of the Parts
  • African American Financial Practices
    • Payments
    • Table 3-14a Bill Payment Methods by Race/Ethnicity and Gender, 2006 (U.S. Adults)
    • Table 3-14b Bill Payment Method Indices by Race/Ethnicity and Gender, 2006 (U.S. Adults)
    • Domestic Remittances
    • Table 3-15a Use of Domestic and International Money Remittances: By Race/Ethnicity and Gender, 2006 (U.S. Adults)
    • Table 3-15b Usage Indices for Domestic and International Money Remittances: By Race/Ethnicity and Gender, 2006 (U.S. Adults)
    • Credit Monitoring
    • Table 3-16 Use of Credit Monitoring Services by Race/Ethnicity, 2006 (U.S. Adults)

  • A lower Level of Banking Among Blacks
    • Table 3-17 Use of Financial Services by Type: By Race/Ethnicity, 2006 (U.S. Adults)
    • Table 3-18 Use of Financial Services by Type: By Race/Ethnicity and Marital Status (U.S. Adults)
    • Table 3-18 Use of Financial Services by Type Among Blacks: By Educational Attainment, 2006 (African-American Adults)

  • Students
    • Table 3-19 Use of Educational Loans by Race/Ethnicity, 2006 (U.S. Adults)

  • Unbanked & Underbanked
    • Definitions
    • Table 3-20 The Unbanked, by Ethnicity, 2007

  • Who Are the Underbanked?
    • Table 3-21 Check-Cashing Services* by Bank Status and Ethnic/Racial Group
    • Table 3-22 Types of Financial Services Obtained from Currency
    • Exchanges*
    • Table 3-23 Reasons for Not Having a Checking Account*

  • Discrimination
    • Automotive Loan Mark-Ups
    • Table 3-24 Comparison of Subjective Markup Charged to African-American versus White Borrowers Five Captive Auto Lenders
    • 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
      • Table 4-1 Overview of Credit Card Use by Race or Ethnicity, 2006 (U.S. Adults)
      • Table 4-2 Frequency of Credit Card Use by Race or Ethnicity, 2006 (U.S. Adults)
      • Table 4-3 Monthly Number of Credit Card Transactions by Race or
      • Ethnicity, 2006 (U.S. Adults)

    • Level of Education Affects Use
      • Table 4-4 Credit Card Use by Educational Attainment: Blacks vs. Overall Population, 2006 (U.S. Adults)
      • Table 4-5 Monthly Number of Credit Card Transactions by Educational Attainment: Blacks vs. Overall Population, 2006 (U.S. Adults)

    • Personal Income Level Show Similar Pattern to Education
      • Table 4-6 Overview of Credit Card Use, by Individual Employment Income: Blacks vs. Overall Population, 2006 (U.S. Adults)

    • Household Income Same Pattern, Lower Penetration
      • Table 4-7 Overview of Credit Card Use, by Household Income: Blacks vs. Overall Population, 2006 (U.S. Adults)
      • A Look at Credit Card Use by Socio-Economic Level
      • Table 4-8 Overall Credit Card Use, by Race or Ethnicity: By
      • Socio-Economic Level, 2006 (index)
      • Table 4-9 Monthly Credit Card Use, by Race or Ethnicity: By Socio-Economic Level, 2006 (percent)

    • A Look at Credit Card Use by Marital Status
      • Table 4-10a Overall Credit Card Use by Race or Ethnicity: By Marital
      • Status, 2006 (percent)
      • Table 4-10b Overall Credit Card Use by Race or Ethnicity: By Marital
      • Status, 2006 (index)

    • Link between Life Insurance and Credit Card Use
      • Table 4-11 Credit Card Use Among Life Insurance Policyholders by Race
      • or Ethnicity, 2006 (percent)

    • The Most Popular Credit Card Brands
      • Table 4-12 Overall Credit Card Brand Use, Bank Cards: Overall Population vs. Black Population and Percentage of Total Black Users, 2005

    • Few Black Singles Own Credit Cards
      • Figure 4-13 Credit Card Types Owned by Singles: By Race/Ethnicity (percent)

    • Popular Non-Bank Cards
      • Table 4-14 Overall Credit Card Brand Use, non-Bank Cards: Overall Population vs. Black Population by Total Black Users, 2006

    • African American Credit Card Payment Practices
      • Table 4-15 Credit Card Payment Practices, Pay All of Their Balances by Race or Ethnicity, 2006
      • Table 4-16 Credit Card Payment Practices, Make Minimum Payment by
      • Race or Ethnicity, 2006
      • Table 4-18 Credit Card Payment Practices, Make No Payment by Race or Ethnicity, 2006

    • Industry Outlook for Subprime Credit Cards

    Chapter 5 African American Debit Card Use and Brand Preference

    • Figure 5-1 Projected U.S. Market for Debit Cards, 2005-2010 (in billions of dollars)
    • Debit Cards Lead Credit Cards in the African American Market
      • Table 5-1 Comparison of Debit Card and Credit Card Use by Race or Ethnicity, 2006 (U.S. Adults)
      • Table 5-2 Monthly Frequency of Debit Card Use by Race or Ethnicity, 2006 (U.S. Adults)

    • The link between cash preference and debit card use
      • Table 5-3 Debit Card Use by Race or Ethnicity Based on Preference for Cash (Any Agree), 2006 (U.S. Adults)
      • Table 5-4 Monthly Number of Debit Card Transactions by Race or Ethnicity, 2006 (U.S. Adults)
      • Table 5-5 Debit Card Use by Educational Attainment: African Americans vs. Overall Population, 2006 (U.S. Adults)
      • Table 5-6 Monthly Debit Card Use by Educational Attainment: African Americans vs. Overall Population, 2006 (U.S. Adults)
      • Table 5-7 Overall Debit Card Use by Socio-Economic Level: African Americans vs. Overall Population, 2006 (U.S. Adults)
      • Table 5-8 Monthly MasterCard Debit Card Use by Socio-Economic Level: African Americans vs. Overall Population, 2006 (U.S. Adults)
      • Table 5-9 Monthly MasterCard Debit Card Use by Gender: African Americans vs. Overall Population, 2006 (U.S. Adults)

    • Gender Gap Explained
      • Table 5-10 Preference for Cash by Race and Gender, 2006 (U.S. Adults)
      • Table 5-11 Make own payments by Race and Gender, 2006 (U.S. Adults)
      • Table 5-12 Debit Card Use by Race, Gender and at least 10 Shopping Trips a Month, 2006 (U.S. Adults)

    • Brand Preference
      • Table 5-13 The Most Popular Debit Cards by Brands: African Americans vs. Overall Population, 2006 (U.S. Adults)

    • Life Insurance and Debit Cards
      • Table 5-14 Debit and Credit Card Use among African American Life Insurance Policyholders, 2006 (index)

    Chapter 6 African American Prepaid Debit Poised to

    • Break Out
      • Market Size
      • Packaged Facts Predicts $200 Billion on Prepaid Debit Cards in 2011
      • Table 6-1 Prepaid Debit Card Market 2003-2011 (in billion $)

    • Prepaid Debit Poised to Break Out
    • Current Players in the African American Prepaid Card Market

  • Pricing
    • Table 6-2 General Spending Prepaid Card Pricing
    • Table 6-3 Average Prepaid Cardholder Transactions

  • 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
      • Table 7-1 AMEX and Visa Signature Card Use by African Americans in Socio-economic Level I, 2006 (index)

    • 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
      • Figure 7-1 Annual Expenditures on Telephone Services, African Americans vs. All Consumers

    • Cell Phones Just as Common
      • Figure 7-2 Ownership and Use of Cell Phones, African Americans vs. All U.S. Adults by Gender
      • Source: Simmons Market Research Bureau, Spring 2005 National Consumer Survey; compiled by Packaged Facts
      • Table 7-2 Use of Cellular/Wireless Services, African Americans vs. All U.S. Adults by Gender
      • Table 7-3 Use of Telephone Services, African Americans vs. All U.S. Adults by Gender
      • Table 7-4 Use of Telephone Credit Cards, African Americans vs. All U.S. Adults by Gender

    • Pilot Projects
    • Domestic Remittances by Wireless
      • Barriers to Mobile Financial Services Adoption

    • Need for Partnerships with Media Outlets That Target African Americans
      • Table 7-5 Attitudes toward Magazines, African Americans vs. All U.S. Adults by Gender
      • Table 7-6 African American Attitudes toward Television by Gender
      • Table 7-7 Impact of the Internet on African American Media Use, by Gender

    • Risks
      • Regulatory and Reputation Risks

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