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

Table of Contents

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