Consumers are changing the way they use rewards programs, shifting away from luxuries in favor of necessities, according to executives.

Bankers from several major issuers said that the trend dates to the third quarter of last year, as the economic decline accelerated.

Nancy Gordon, the executive vice president of Citigroup Inc.'s ThankYou rewards program, said that consumer interest has surged this year in receiving practical rewards such as discounts on mortgage and student loan payments.

Citi customers can redeem points for mortgage credits payable to any bank. "We were surprised at the number of redemptions" for mortgage and student loan payments "at the $750 and $1,000 value level," Gordon said, while travel redemption appears to have taken the biggest hit. She said that in the past it was common for consumers to hoard their points until they had accumulated enough to redeem for a single, large trip but now it's more common for people to redeem their points as they earn them.

For Citi, the shift coincided with a partnership with Amazon.com Inc. announced in December that enabled customers to redeem ThankYou rewards points for merchandise at the online retailer, including books, housewares, electronics and many other practical items, Gordon said.

The pairing has been very successful this year, Gordon said. "The partnership enabled us to offer millions of rewards to our customers," she said.

Capital One Financial Corp. has observed similar trends, according to Diana Don, a company spokeswoman. Travel remains a popular redemption choice for Capital One's rewards members, but the McLean, Va., financial company has also had a sharp increase in the number of merchandise redemptions since the fourth quarter.

"The key area of growth we've seen is cash and gift card redemptions," Don wrote in an e-mail.

Keeping track of how consumers redeem their accumulated rewards points is important for issuers, because it helps them determine what kinds of offers could help sway cardholders to actually use one card over another, observers said.

Gordon said the upcoming holiday season may reveal a lot about how consumers view rewards during a recession. "It will be interesting to see if consumers use the rewards for gift giving or keep them for themselves," she said.

Mark Johnson, the president and chief executive officer of the Cincinnati consulting company Loyalty 360, said that some consumers may be having trouble with the concept of being rewarded during a tough economic period.

"As people feel less wealthy, they still want to be rewarded, they still want to be engaged and feel like they are important," he said.

But many people also worry that they need to be practical instead of indulging themselves, Johnson said. For example, he said, some consumers are wondering "should I redeem my points for travel if I don't have a job in a week?"

But some issuers said that travel is still a big driver for rewards programs, and they are continuing to develop travel programs now even if consumers are not using rewards programs as much as they did in the past.

In June, for example, SunTrust Banks Inc. of Atlanta introduced a cobranded Delta Air Lines Visa check card that enables customers to earn Delta miles on all signature debit purchases.

"For us, it's an opportunity to attract new" customers "to the bank," said Hugh Gallagher, SunTrust's senior vice president for deposit product management.

The partnership between SunTrust and Delta makes sense because the two companies share many customers, Gallagher said. Both have a strong presence in the Southeast and in Washington.

"It was a pretty good matchup between the organizations, he said.

Johnson agreed that travel is one of the most important rewards offerings, and he expects redemptions in the category to rebound once the economy picks up. "But it won't pick up as quickly as some people would like," he said.

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