Aite Group, LLC Report #200812082

A new report from Aite Group, LLC provides insight into the demographics and attitudes of consumers who choose credit cards based on rewards programs, and sheds light on the other factors that drive consumers to select one card over another. It also outlines ways in which card issuers can best compete for the use of their card above others in rewards card users' wallets.



According to Visa, rewards cards now account for more than half of all credit cards, and, even more importantly, roughly eight of every 10 dollars spent on a credit card. Consumers rank rewards as the number two reason for applying for a specific card, behind no annual fees and ahead of low interest rates, according to Aite Group's January 2008 survey of 422 cardholders. As the number of cards in a consumer's wallet grows, so does the importance of rewards programs in influencing the cardholder's choice of cards; consumers don't stop using their other cards after getting a new rewards card. Among the ways to increase the use of a specific rewards card, issuers should consider expanding the range of goods and services that earn premium rewards.

"It is clear that most rewards cardholders possess multiple rewards cards," says Ron Shevlin, senior analyst with Aite Group and author of this report. "As issuers look to one-up each other with ever-expanding rewards, Aite Group believes that there's an opportunity for issuers to differentiate themselves by creating a rewards hub that enables cardholders to aggregate and integrate programs."

This 14-page Impact Note contains 15 figures. Clients of Aite Group's Retail Banking service can download the report by clicking on the icon to the right.



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Posted by John B. Frank Tuesday, December 9, 2008

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