Love Affair continues between consumers and their reward/rebate cards
21 November 2003
Monthly $ charges are double the amount on other cards; satisfaction significantly higher too, says inside track® Report
NEW YORK — CONSUMER usage of and satisfaction with reward/rebate cards is significantly higher than other cards and is on the rise, according to data just released by Inside Track®,the credit card consumer attitude and behavior monitoring service from Synovate Financial Services Practice.
Looking at the past 12 months, ending second quarter 2003, the average monthly new charges were significantly higher for reward/rebate bankcards than for those cards without rewards/rebate schemes - $883 versus $394.
"Reward cards have been around for years, but their level of performance continues to be outstanding," said Andrew Davidson, Vice President of Competitive Tracking Services for Synovate's Financial Services Practice. "A reward or rebate program can have a significant impact on cardholder behavior."
And satisfaction was higher, too. The study found that, out of over 5,000 credit card-owning households surveyed during the 12-month period, 44% of reward/rebate bank cardholders reported they were "extremely satisfied" with their cards versus 31% for holders of other types of cards.
Please see attached graph (PDF, 64Kb) for specific information about positive impact of reward/rebate cards.
"Cardholders are finding significant value in these cards as they increase usage," said Davidson. "The more they use the card, the more they benefit from the rewards program, and the more satisfied with the card they become."
Terms of Endearment
Inside Track® found that over a five-year period, both usage and satisfaction with reward/rebate cards have steadily increased.
"The increase in overall reward/rebate card satisfaction and higher consumer usage also coincides with an improvement by issuers in the terms for these cards," added Davidson. "Consumers are registering high approval levels for such deals as very low Annual Percentage Rates (APR's) and higher credit lines".
The US Government's consistently low prime lending rate in recent years has created some excellent credit terms for consumers, and APR's for reward/rebate cards have been forced downward.
No longer associated with high rates, the majority of reward/rebate bankcards - close to 67% - now have an APR of less than 15.00%, according to Inside Track®.This compares to 35% of these cards which had low APRs back in 1999.
"The mean APR is now 12.81% and compares favorably to the mean APR's of cards that do not offer cash rebates or rewards at all, which is 12.64%," Davidson pointed out.
The average credit line for reward/rebate cards has also jumped significantly over the years, which made consumers happy. In the 12 months ending second quarter 2003, reward/rebate cards had mean credit lines of $11,314 as compared with $7,672 back in 1999. Consequently, 57% of consumers expressed "extreme satisfaction" with the new credit lines from 48% over the same period in 1999.
"A higher credit line means more of an opportunity to collect points," said Davidson.
Reward/Rebate Cards Are Less Likely to Be Used for Carrying Monthly Balances
However, despite improving credit terms, reward/rebate cards are still less likely to be used for carrying monthly balances. Only 26% of reward/rebate cards carried an outstanding monthly balance over the 12-month period ending second quarter 2003, compared to 44% of non-reward/rebate cards.
"American consumers are savvy with their credit cards," concluded Davidson. "Reward/rebate cards are more likely to be used by cardholders to accumulate points or cash rebate dollars, than for carrying monthly balances for more than one month. For these consumers, their reward/rebate cards offer the 'perfect relationship,' and they love to use them."
Contact(s) for this press release
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Andrew Davidson
Vice President |
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222 South Riverside Plaza |
Telephone: +1 914-332-5300 |
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Phyllis Stevens
Vice President |
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Zlokower Public Relations |
Telephone: +1 212 447 9292 |
Synovate, the market research arm of Aegis Group plc, generates consumer insights that drive competitive marketing solutions. The network provides clients with cohesive global support and a comprehensive suite of research solutions. Synovate employs over 6,000 staff across 62 countries.
For more information on Synovate visit www.synovate.com.