Consumers with rewards-based cards prefer lower-value benefits such as cash-back incentives to longer-term perks such as airline miles, survey data suggest.

Synergistics Research Corp., an Atlanta-based financial-services research firm, conducted the national online survey of 1,000 consumers ages 18 and older in late 2009.

The company found that 44% of survey participants preferred programs that offer lower-value rewards such as statement rebates, discounts at various merchants or gift cards. In a similar 2006 survey, just 26% of participants preferred such rewards.

Today’s consumers prefer lower-value, faster rewards because often they find calculating points for some long-term reward cards to be complicated, especially travel-based rewards cards, Bill McCracken, Synergistics CEO, tells PaymentsSource.

In fact, 36% of survey participants said cash rebates likely would increase their credit card use, while only 13% said travel rewards would do so.

“Consumers don’t want points or miles,” McCracken says. “They want some kind of cash component that is easy to see and understand.”

Travel-based reward cards, which are part of the long-term, high-value rewards sector, have “really decreased in preference in a mass-market view,” McCracken says. But a specific segment of households that earn more than $100,000 annually still prefer travel-based benefits, he adds.

The survey found that 24% of participants said they prefer to split their participation between long-term and short-term rewards, down from 28% who said so in 2006.

Additionally, 44% of participants said they are not willing to pay for a credit card reward program, while 27% said they would be willing to pay at least $50 annually.

While most consumers have been “conditioned to expect a rich rewards program for free, the economics of that model is going away, and it is hard for consumers to understand that,” McCracken says.

Most issuers are moving to a two-tiered system, offering one card with no annual fee that support lower-value rewards and a fee-based card with richer rewards, McCracken notes. “There really isn’t going to be any middle ground,” he says.

What do you think about this? Send us your feedback. Click Here.

 

Subscribe Now

Authoritative analysis and perspective for every segment of the payments industry

14-Day Free Trial

Authoritative analysis and perspective for every segment of the industry