Despite fierce competition and reductions in APRs, relatively few consumers are switching to better deals, notes the professional services firm in its 'Precious Plastic' report.

PwC says the resistance towards changing credit cards will result in smaller issuers selling out to the major banks and monoline card specialists. The focus of the dominant issuers will be to retain customers through loyalty programmes and convenience rather than to acquire new customers based on pricing.

Richard Thompson, partner, PwC, says: "We believe that the UK market is unlikely to support more than six card issuing operations and in the medium to long term there are likely to be few issuers, if any, who will continue to operate with a market share of less than 10%."

The study reports that annual losses from fraud in the UK credit card market have more than tripled to £228 million since 1998. Whilst the introduction of chip cards will help to address this, the required use of PIN codes may result in customers reducing the number of cards they use. Issuers will need to ensure their card is the most favoured in order to survive.

The study also showed a move towards risk-based pricing, marking the end of a 'one size fits all' approach. The APR will change from customer to customer as it is set at a rate that reflects an assessment of risk, taking into account individual credit history and possiblilty of future credit losses.

PwC believes the next significant battleground will be over the store card portfolios of the major retailers. "There will be a trend to convert customers from a traditional store-card to a credit card with a more aggressive approach to cross selling other financial services," states the report.