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US Research: Cardholder Loyalty Hinges on Debit, Credit Card Rewards

Insights 17 April 2024
US Research: Cardholder Loyalty Hinges on Debit, Credit Card Rewards

With global economic uncertainty impacting businesses and consumers alike, new research sheds a light on how both can financially optimize their relationships in a cost-effective manner: through strategic and meaningful debit and credit card rewards. A new study[1] by Valuedynamx, a leading global provider of curated, data-driven omnichannel purchase rewards and part of Collinson, has unveiled consumers’ preferences for using debit and credit cards to earn rewards when they shop. The findings can help organizations in the retail and financial services sectors better understand how to structure and manage effective reward programs that drive loyalty, spend and engagement.  

Survey respondents were asked about their debit and credit card use, which of the three primary forms of rewards (cashback, points and miles) they earned with those cards, which rewards they preferred and how the right rewards could drive loyalty and shopping behaviors. The study found the most popular and strategic rewards (e.g., cashback, loyalty points) present a significant opportunity for banks and card issuers to attract and retain cardholders, provide shoppers with choice, drive retail transactions, capture new market share, spur engagement and boost loyalty.

“As a result of ongoing global economic challenges the last few years, we are witnessing a transformation in how people shop, how they stretch and maximize their dollars, which cards are top of wallet and what they expect from their card programs. The rise of personalized rewards, strategic partnerships, experiential perks and other incentives is no surprise as people want to ensure they are getting their money’s worth for each and every purchase—and will adjust their shopping behaviors to do so,” said Kelli Hobbs, VP, Head of US Business Development at Valuedynamx.

Topline research findings include:

  • - Card ownership is ubiquitous. 92% of surveyed individuals have at least one debit or credit card; 83% of cardholders have at least one debit card (average: 1 card) and 74% of cardholders have at least one credit card (average: 2 cards). Yet card usage isn’t evenly split, as over the next six months respondents have forecasted more credit card purchases than debit card purchases.
     
  • - Reward versatility is a cardholder favorite. Cashback was cited as the most desired cardholder benefit due to the versatile nature of redemption options, with 50% of cardholders ranking cashback as the top card benefit. Additionally, cashback is the top feature in respondents’ ideal loyalty programs, mentioned at least four times more often than any other feature. Card-associated discounts and loyalty points rounded out respondents’ top-ranked reward card benefits.
     
  • - Credit cashback offers outpace debit cashback offers. While 74% of credit cardholders reported earning cashback in the last year, only 24% of debit cardholders did. Debit card usage skews toward younger generations, representing an opportunity for financial institutions and merchants to better engage and build loyalty among young shoppers.
     
  • - There are rampant opportunities to capture new cardholders, protect your existing cardholders and boost card use. 58% of cardholders are willing to switch their current go-to card to a new one if it offers higher cashback rates, and 78% of cardholders say cashback is a strong incentive to stay with a card provider. With a significant amount of shopping predicted through the next six months (largely thanks to the winter holidays and end-of-year-spending), financial institutions and merchants with tailored rewards will have ample opportunities to vie for go-to status at checkout.
     
  • - Shoppers are smart and proactive. Before they shop, more than half of cardholders (59%) check for merchant offers associated with their cards. These types of offers could include points linked to their specific card, tailored offers based on their personal shopping/brand preferences, points for a retailer’s loyalty program, cashback or even travel miles.

 

“Card loyalty is present, but fragile,” added Hobbs. “People are open to switching from their current favorite debit or credit card to one that offers better, more budget-friendly rewards. Financial institutions that want to attract, engage and keep loyal cardholders need to prioritize enhancing their reward programs—including focusing on cashback and points/miles features and building strategic partnerships with loyalty reward organizations to create marketing opportunities that can more directly engage shoppers and optimize program spend by ensuring people are rewarded for making certain purchases.”

To learn more about the results, please download the infographic, "Harnessing the Power of Cashback: A Key Strategy for Banks and Card Issuers" below. 

 

[1] “Loyalty Motivators Research” was an online survey conducted by Leger on behalf of Valuedynamx between April 4-12, 2023, with 1,004 US residents aged 18+ surveyed.

Harnessing the Power of Cashback: A Key Strategy for Banks and Card Issuers