Many U.S. consumers continue to shy away from using credit cards, but those that still choose to use them are partial to cards tied to rewards programs, new research suggests.
New York-based Auriemma Consulting Group conducted the research through an online survey of 504 U.S. credit cardholders in December.
Of the 440 participants who responded when asked why they use a credit card for purchases, 42% said the ability to earn and redeem rewards points influenced their decision on which card to use. That percentage is unchanged from when Auriemma conducted a similar survey in October 2009.
For many consumers, the decision to use a card tied to a cash-back program is easy because it means free money, Scott Strumello, an associate with Auriemma, tells PaymentsSource. “Consumers are being paid to do something, so the motivation is pretty clear,” he says.
Overall, rewards programs for both debit and credit cards have increased during the past few years, Strumello says.
In fact, 60% of JPMorgan Chase & Co.’s credit card portfolio included a rewards-based card in 2009, up from 32% that did in 2003, Strumello says, noting that Chase data for 2010 are not yet available. The large increase suggests rewards-based card offerings were at a steady increase, Strumello says. “It is a strategic priority for most issuers, as we are seeing this across the board,” he adds.
The so-called Durbin amendment to the Dodd-Frank that resulted in the Federal Reserve Board proposing a 12-cent cap on debit card interchange fees, however, has changed the dynamic for debit rewards, Strumello says. And in November, Chase announced plans to phase out its debit rewards program because of the pending Fed rate cap (
Many in the industry hope credit card rewards programs will not meet the same fate, though several lawmakers believe such legislation is inevitable, Strumello says.
What do you think about this? Send us your feedback.
