By 2009, market research firm Packaged Facts predicts that 85% of consumer credit cards in circulation will be offering some sort of reward for its usage, according to its new report 'The US Market for Rewards Cards'.
According to the report, reward-based credit cards have become a foundation stone for the consumer credit industry, with consumers already receiving airline frequent flyer miles, points toward purchases, hotel credits, cash back, rebates toward savings schemes, and even charitable donations in their name. And while some consumers just want a credit card that offers straightforward credit with no extra frills, increasingly the card holders and issuers are seeing the benefit of having a credit programme that offers rewards for loyalty.
Battle for loyalty
According to Don Montuori, acquisitions editor for Packaged Facts, industry data suggests that reward programmes can help increase customer spend, usage, and retention, while also helping to facilitate the shift toward electronic payment platforms.
Profitable
With more than 2.2 credit cards having been issued for every man, woman and child in the USA, grabbing space in the consumer's wallet needs more sophisticated and imaginative reward strategies, geared toward personalisation and differentiation - usually using points redemption programmes or soft benefits. Rewards programmes also increasingly capturing interchange fees - both from the everyday consumer and also the affluent consumer - as they drive spend and increase customer retention.
Youth targeted
The report speculates that younger cardholders will be more likely to use and/or convert to rewards card programmes, because they have grown into expecting such programmes as a part of engaging with their card issuer; however, older consumers - especially the less affluent - may prove less likely to do so.
The report
Based on interviews with many industry sources, the report offers insight into almost all aspects of reward card industry, and assesses what the key players are doing, and analysing the top 10 card issuers and their reward products. The report also assesses economic factors such as consumer credit and debt trends and the effects of rising interest rates on card growth; consumer usage factors, such as customer retention and growth trends, rewards and benefits trends; and the shifting landscape of reward types, such as cash, miles, points, and other redemption choices. For US$3,250 the report can be obtained directly from Packaged Facts.
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