Consumer expectations for credit card rewards have become ubiquitous across the credit score spectrum, generations, and with both consumer and business cardmembers.
Financial institutions face a tough balancing act. They must offer a rewards program appealing enough to attract new cardmembers, while ensuring the program is profitable. Considering the costs and complexity involving reward vendors, compliance efforts, and a potential cash reserve, community banks and credit unions may find this profitability challenging.
There are strong consumer trends in today’s competitive market. When considering how to create or optimize a credit card rewards program, consider these three statistics:
- 43% of consumers identify rewards as a top motive for seeking a new credit card.
- 35% of consumers apply for a new credit card at least once a year to take advantage of sign-up bonuses.
- 55% of consumers said the flexibility to redeem whatever they choose is important.
While trust in their financial institution is a contributing factor, according to this report from PYMNTS Intelligence and Elan, what’s clear is consumers are willing to find a credit card at whatever financial institution offers the best rewards to meet their needs.
Today’s rewards programs are expected to be easy to use, accessible, and available on all devices. Cardholders want an immediate line-of-sight between their spend and the reward earned, like the option to see mobile alerts on points accumulated from transactions. Elan Credit Card recently launched a new mobile app that fulfills that need by offering the ability to see points year-to-date, by statement, and by transaction.
To optimize engagement, rewards should be fully transparent, and the process of spending and receiving rewards should be both interactive and seamless. Redemption needs to be just as easy, with the option to pay with points and/or auto-transfer earned cash to an account of the cardholder’s choice.
It takes a skillful balance to run a successful credit card rewards program appealing enough to draw loyal cardmembers while maintaining profitability and compliance. The direct operational cost of a rewards credit card product is higher on a per-balance basis than any other loan product. Most of these costs are attributed to cardholder acquisition and administrative expenses.
By providing top-of-wallet products, Elan makes it easier for community banks and credit unions to fortify existing relationships and build loyalty. Explore more insights on rewards programs in this new whitepaper and learn more about the benefits of the agent credit card issuing model and why more than 1,200 financial institutions trust Elan as their partner.
