Expenses rising for issuers

The credit card war is getting even hotter, but this time the price to play is being driven higher by consumers rather than the big banks, says one analyst.

While the average cash back reward is staying the same—about 1.5% of spend—what is driving up costs for issuers are increasingly savvy consumers redeeming their rewards more and expecting more rewards programs to be easy to use, especially through mobile apps, said Tim Kolk, principal at TRK Advisors.

“It is more expensive for issuers today than it used to be,” said Kolk. “Consumer behavior is making the game more expensive, and that has implications for credit unions. Because if consumers are learning to redeem rewards more effectively, that’s going to increase costs to run rewards programs.”

 

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