The world of credit cards and reward programs is evolving rapidly, ushering in an era of enhanced user experiences, improved accessibility, and expanded options. Credit unions must adapt to these changes to provide members with effective and exciting rewards programs. While traditional credit card reward programs have offered incentives such as exclusive merchandise, event tickets, travel, and cash savings, the accelerating pace of technological advancement poses new challenges and opportunities.
A Booming Market
According to the U.S. Consumer Financial Protection Bureau’s 2018 Consumer Credit Card Market report, reward card spending has continued to rise. This trend is expected to persist as more consumers engage in remote banking and digital transactions. Future credit card rewards programs will leverage technology to enhance user experience, offering more accessibility and diverse redemption options.
Emerging Trends
Here are some credit card reward program trends that are expected to shape the future:
Symbiotic Partnerships
Redemption options are set to expand, allowing cardholders to use points across a broader range of industries and products. For example, partnerships like the one between Amazon and Capital One enable cardholders to use rewards points for Amazon purchases. This trend of alternative redemption options is crucial for keeping reward programs attractive and versatile.
Cash Back Dominance
While travel rewards often offer better payback, cash back rewards remain straightforward and universally appealing. As consumers' priorities shift, especially in uncertain times, cash back cards are gaining popularity. They provide immediate and flexible value, making them a preferred choice for many cardholders.
Higher Return Points
Currently, many cards offer 2x to 3x points back on categories like gas and dining. However, industry experts anticipate these rates will increase, with a notable shift towards grocery reward points. This adjustment reflects changing consumer habits and the growing emphasis on essential purchases.
Reduced Fees
In a competitive market, credit card companies are increasingly reconsidering hefty card fees. By reducing or waiving fees, they aim to attract and retain customers who are looking for cost-effective and valuable reward options.
Moving Forward in the Credit Card Industry
The shift towards remote banking and digital wallets is likely to continue and expand. Credit unions should build incentives that entice members toward services most essential to their success. FLEX allows credit unions to allocate points to individual services, offering fee discounts and rate incentives as members accumulate more points. Learn more about the credit card reward options FLEX offers in our Relationship Pricing eGuide.
