Consumer Credit Card Preferences:

Transcription

1 Using Rewards Programs Linked to Interest Rates to Drive Usage and Profitability May 2006

2 Using Rewards Programs Linked to Interest Rates to Drive Usage and Profitability Overview New Javelin consumer data provides large credit card issuers with in-depth information on the card features that drive consumer selection and usage. Issuers must often segment their portfolio marketing cards to small subsections of the consumer population. Javelin proposes a link between interest rates and rewards to meet consumer needs and drive usage among a broader subsection of the most profitable cardholders. Primary Questions What features resonate most with consumers in selecting a credit card? What drives consumers to select one card over another at the time of purchase? How will innovative rewards programs linked to interest rates drive revenue? What unique rate-oriented programs are issuers presently deploying? Major Findings Low interest rates drive consumers selection of credit cards and usage decisions at the point of sale more than any other feature. Nearly 70% of consumers cite low rates as a top reason for choosing a card, and roughly 50% state it as their primary reason for using the card. As rewards points are also a major driver of choice and usage, several issuers have begun successful programs that link interest rates and rewards points. Audience: Author: Contributors: Card issuers, payment networks Bruce Cundiff, Research Analyst James Van Dyke, Founder and Principal Analyst Don Phan, Research Analyst Stephen Matava-Knighten, Research Associate Editor: Mary T. Monahan Publication Date: May 2006 Price: $950

3 Using Rewards Programs Linked to Interest Rates to Drive Usage and Profitability Table of Contents Overview... 1 Major Findings Related to Credit Card Rewards and Marketing... 1 Low Interest Rates Surpass all other Features when Consumers Choose a Card Issuer 2 For Card Usage, Low Rates, Available Balances, Rewards Bring Card to Top of Wallet.. 3 Develop Rewards Programs that Link Interest Rates and Card Usage... 4 Table of Figures Figure 1: Top Credit Card Selection Features Figure 2: Consumer Decision for Top of Wallet Cards.... 3

4 Using Rewards Programs Linked to Interest Rates to Drive Usage and Profitability Companies Mentioned in this Report American Express Bank of America Capital One Discover E*Trade Financial JPMorgan Chase MBNA Providian Washington Mutual Bank

5 Using Rewards Programs Linked to Interest Rates to Drive Usage and Profitability Sample Pages

6 Using Rewards Programs Linked to Interest Rates to Drive Usage and Profitability Place Your Order as Follows: 1) Call us at , x26 2) us at 3) Fax or Mail using the form below: Please send me the following report(s): Report Title Publication Date Price Name Title Organization Division or group Phone Fax Address Signature to confirm your order: Payment Method: [ ] Payment card [ ] Check Enclosed [ ] Invoice me Visa, MC, AE or Disc. card #: Exp date: / Name on Card: Signature For invoicing, provide PO number: (Invoicing is available to financial institutions or publicly owned firms) Note: Reports are provided in electronic PDF form only. Javelin reports are subject to standard terms and conditions, as described on our web site. Javelin will contact you in the future to provide our free research newsletter or other mailings. If you do not wish to receive our newsletter or other mailings, you may advise us of this. Your contact information will not be sold to other organizations.