UK consumers are demanding rewards credit cards that offer enhanced benefits or greater value, according to research conducted by the Auriemma Consulting Group (ACG). ACG’s research found that consumers have become apathetic towards their current rewards cards, with 25% of consumers being neither satisfied nor dissatisfied with their rewards card, and 31% of consumers perceiving…
Navy Federal Credit Union and Cartera Commerce card-linked marketing solutions released a new card-linked offer program for Navy Federal members to boost rewards for shopping. Navy Federal launched its new Member Mall to more than one million members. Members can now earn extra cash back or rewards points — up to 15 times their normal rewards earning — with online shopping offers linked to their Navy Federal credit card accounts. The program is run on Cartera’s card-linked offer platform, which powers card-linked offers for four of the top five financial institutions, four of the top five airlines and more than 150 million U.S. consumers. The Cartera platform is a fully hosted, managed service allowing Navy Federal to pull merchant offers from Cartera’s exclusive Offer Cloud, link them to card member accounts, display them via multiple marketing channels, track and confirm purchases, and deliver rewards.
Banks are now responding cautiously to the Durbin Amendment and the new economics of debit cards. With interchange revenue streams cut 50%, many banks are tempted to start charging fees and dropping rewards on debit cards, but-warns Auriemma Consulting- new this new pricing will encourage consumer to spend much more. Less than 10% of debit…
A new survey has found that 56% of consumers prefer cash back on their credit cards, while 23% said they favored air miles. About 12% preferred points and only 9% selected automatic rebates or discounts as their favorite rewards. The results from CardTrak.com are based on an online poll of 1,000 consumers completed this week. Nearly all general purpose credit cards offer some type of reward either at the network level or the issuer level. According to CardData the number of reward credit cards in the U.S. has grown from 290 million in 2002 to 490 million in 2006. A recent report from FischerJordan calculated that rewards payment cards accounted for 77% of credit card volume in 2005, compared to just 40% in 2001. The research found that credit card spend on rewards card is growing at a CAGR of 31%, compared to 12% for non-reward cards. (CF Library 3/20/07)
A new report has calculated that rewards payment cards accounted for 77% of credit card volume in 2005, compared to just 40% in 2001. The research found that credit card spend on rewards card is growing at a CAGR of 31%, compared to 12% for non-reward cards. The white paper by FischerJordan says that basic rewards offerings are becoming a market necessity; no longer a competitive advantage, but instead a commodity. The form says it is clear that program cost containment coupled with commoditization will spur a change in program substance and management. Reengineering will give way to a revision of traditional program economics, including a change in program structure and management. Coalition programs, white labeling, and association rewards will provide the models of industry externalization. The external result of these changes will be that the largest loyalty programs will emerge bigger, permeating multiple industries; while internally, program value will be unlocked, turning a cost center into a profit generating activity.
Spending on credit card rewards programs by U.S. issuers is continuing to rise, growing at a CAGR of 27%. A new report predicts that rewards spending will rise to $18.4 billion in 2010 from $10.3 billion last year. The Aite Group study says that most of that growth will be driven primarily by the continuous, massive cannibalization of non-reward credit and debit cards by reward credit and debit cards. Other factors, such as the development of non-card-based reward programs or cost inflation in existing programs, will play a relatively modest role in driving up institutions’ spending. By 2010, Aite Group expects that institutions will spend $16.6 billion on general-purpose credit card rewards, up from $9.5 billion in 2006. Spending on debit card rewards will continue to grow to reach $900 million in 2010, up from $400 million last year. Spending on non-card reward programs will also grow from $400 million in 2006 to $900 million by 2010. By 2010, 95% of financial institutions’ spending on rewards will be driven by credit and debit card programs, down from 96% in 2006.
U.S. Bank and the U.S. Equestrian Federation have trotted out a new affinity card. The “United States Equestrian VISA Platinum” card is available in three breeds: a non-reward card that contributes the most back to USEF; a second that earns points redeemable for merchandise, gift certificates or nearly any reward with the “Name Your Own Reward” option; and a third that provides cash back to the cardholder. The card supports USEF equestrian teams in their quest to compete in international competition. The USEF has more than 80,000 members.
Direct mail credit card offers during the first quarter were up 11%, making it the highest quarter to-date. According to Synovate’s “Mail Monitor” there were 1.42 billion credit card offers mailed in the first three months of this year. The record high mailings coincide with increasing promotions of bankcards with issuer proprietary reward and rebate programs, which made up 27% of all bankcard mailings in the quarter, up from 16% in the prior year. Synovate says that during the first quarter, 43% of solicitations offered a low introductory APR, usually 0.0%, up from 21% the previous year. However, the response rate reached a record low of 0.4%. According to “Inside Track,” Synovate’s credit card owner behavior and communication tracking service, reward card holders spent more than twice as much as non-reward card holders in the first quarter.
Credit cards offers with a reward program continue to dominate the U.S. market. Of 325 million direct mail solicitations in April, 55% were for cards that have a reward program, compared to 45% in 2003, and 30% in 2002. According to MINTEL’s Comperemedia, one reason for the continued success of reward cards is that a growing number of investment firms are offering reward cards. The research firm also says reward programs are becoming more sophisticated by offering longer term rewards such as “life experience rewards”, “immediate gratification rewards,” and points toward account management. The overall mail volume figures for April of 325 million was lower than the previously reported data of 347 million for January.