Eight-five Percent of Credit Cards to Carry Rewards by 2009: Research
Fully 85% of credit cards will carry rewards by 2009, up from 63% of cards today, according to Packaged Facts research. That’s up from 25% of cards in 2003 and only 10% in 1999.
Packaged Facts estimates there will be 849 million rewards-based credit cards in circulation in 2009, up from 404 million cards in use now. Growth will come quickly over the next few years, then taper off, the research firm predicts. Younger cardholders are more likely to embrace rewards programs because they grew up with them, said New York-based Packaged Facts in its U.S. Market for Rewards Cards report.
Part of the push comes from financial service firms’ focus on boosting card usage, rather than acquisition. As the card market matures, firms earn more by increasing current cardholders to spend more than seeking new customers. Chase, for example, reports that 64% of sales are on rewards-based cards, even though rewards-based cards account for only 38% of active accounts, per Packaged Facts. American Express’ Membership Rewards members spend four to five times more than standard cardholders.
“Offering rewards will increasingly become a necessary part of issuer card programs,” said Packaged Facts Acquisitions Editor Don Montuori in a statement. “Industry data strongly suggests that reward programs can help increase customer spend, usage, and retention, all the while helping to facilitate the shift toward electronic payment platforms.”
Forty-three percent of American consumers have a rewards-based credit card now, and account for 8.6% of all current credit- and debit-card holders, Packaged Facts reports. Consumers prefer reward, co-branded and loyalty cards 2:1 over standard credit cards.
Favorite type: Co-branded airline cards, followed by an issuer’s own program (such as Visa Rewards) and co-branded, non-airline cards (see chart).
