Posted by: Alina Comoreanu

There is a big difference between simply getting a rewards credit card and finding the best offer for your needs. Finding any old rewards card is easy. Hundreds of offers are available, and even people with bad credit can qualify for some of them. But with numerous rewards currencies to choose from and various restrictions to watch out for, the best rewards card isn’t always so obvious.

Given that the right rewards credit card is worth more than its weight in gold, WalletHub analyzed the market to help people make truly informed choices. We compared every non-cobranded rewards credit card from the 20 largest issuers (61 total offers). And we evaluated each card’s eligibility requirements, rewards earning and redemption policies, and expected rewards value.

Below, you check out our findings, plus a breakdown of the best rewards credit cards from each major issuer and some tips for choosing the right rewards card.Some of the cards listed on this page originate from our partners, but that did not impact our conclusions. Offers are accurate as of May 14, 2018 and many are likely to have changed since.

1. Main Findings
2. Best Rewards Credit Cards By Issuer
3. Tips for Choosing a Rewards Card
4. Detailed Rewards Policies By Issuer
5. Methodology
6. Ask the Experts

Main Findings

 

Best & Worst Overall: Capital One has the best credit card rewards program for the fourth consecutive year, earning an average WalletHub score of 86.2%.

 

Earning Potential: The best rewards card can yield up to $980 more than the worst rewards card over the first two years.

 

Strategic Redemption: Redeeming for travel is still the best deal, yielding 27% more value than redeeming for merchandise, the worst option.

 

Earning Policies: USAA leads the way with no earnings limits and rewards that neither expire nor are forfeited if you miss a payment.

 

Redemption Policies: Issuers appear content to continue using redemption restrictions to limit the cost of rewards programs, as none scored above 64% in this category.

 

Eligibility & Transparency Standards: Navy Federal Credit Union and BECU set the clearest expectations by stating rewards terms and restrictions upfront.

 

Best Rewards Credit Cards By Issuer

WalletHub crunched the numbers, calculating how much the average person would earn with each card, after fees, over the first two years of use. We used a two-year timeframe to level the playing field between cards that offer first-year promotions (i.e., an initial bonus and/or a waived annual fee) and those that don’t.

Issuer (Total Rewards Cards*)	Best Card	2-Year Value of Best Card	Best Card’s Score (21 max)
Chase(5 rewards cards )	Chase Sapphire Preferred® Card	$1,817	17.8
Alliant Credit Union(2 rewards cards )	Alliant CU Visa® Platinum Rewards Card	$1,695	14.5
Capital One(5 rewards cards )	Capital One® Venture® Rewards Credit Card	$1,681	16.0
Citi(4 rewards cards)	Citi ThankYou® Premier Card	$1,645	16.2
US Bank(6 rewards cards )	U.S. Bank Altitude Reserve Visa Infinite® Card	$1,642	15.7
Navy Federal Credit Union(4 rewards cards )	Navy Federal Credit Union Visa Signature® Flagship Rewards Credit Card	$1,527	15.7
Bank of America**(4 rewards cards )	Bank of America® Premium Rewards® Credit Card	$1,503	17.5
PNC Bank(3 rewards cards )	PNC Premier Traveler® Credit Card	$1,491	15.2
Discover(4 rewards cards )	Discover it® - Cashback Match™	$1,435	15.6
Barclays(1 rewards cards )	Barclays Arrival® Premier World Elite Mastercard®	$1,302	15.0
Pentagon Federal Credit Union(2 rewards cards )	PenFed Platinum Rewards Visa Signature® Credit Card	$1,224	14.5
Wells Fargo(3 rewards cards )	Wells Fargo Cash Wise Visa® Card	$1,157	16.4
American Express(5 rewards cards )	Blue Cash Preferred® Card from American Express	$1,129	14.0
First National Bank(2 rewards cards )	First National Bank of Omaha American Express® Card	$1,057	14.0
SSFCU(3 rewards cards )	Power Cash Back World Mastercard®	$1,057	15.0
TD Bank(2 rewards cards )	TD Bank Cash Credit Card	$1,044	12.5
Fifth Third Bank(1 rewards cards )	TRIO® Credit Card from Fifth Third Bank	$997	14.0
BECU(1 rewards cards )	BECU Cash Back Visa® Credit Card	$957	15.0

*We considered all non-cobranded consumer rewards cards offered by each issuer. Detailed scoring for other cards considered in this report can be obtained by request. ** Bank of America: Customers enrolled in Preferred Rewards can increase their bonus by 25-75 percent, based on their banking relationship.

Remember, a card’s value figures to change based on your spending habits and the latest terms. Initial bonuses may be limited-time promotions, for example.

For more great offers, check out the complete list of WalletHub’s best rewards credit cards of 2018.

Back to Top

Tips for Choosing a Rewards Card

Rewards cards aren’t one size fits all. But these tips will help you find the plastic that’s tailor-made for your wallet.

1. Determine How You’ll Use It – Do you want a rewards card for all everyday expenses? Or do you want a card just for certain types of spending, such as travel purchases? It’s important to answer these questions early on because it will tell you what terms and types of cards to focus on. For example, some rewards cards offer a consistent earning rate across all spending categories. Others give you more value when you buy certain things or redeem a certain way.So figure out what exactly you’re looking for. Once you know that, it will be easy to decide whether a given credit card has what you need.
2. Consider Both Earning & Redemption Value – It’s impossible to evaluate a rewards credit card if you don’t know how much its rewards are worth. This is obvious with cash back credit cards, but it can be tough to tell with points and miles cards. The easiest way to see how much a credit card’s points or miles are worth is to compare the number needed for a particular item (e.g., a flight) to the cost of that item if purchased independently. For example, if you need 40,000 miles for a $400 flight, the miles would be worth a penny apiece.
3. Avoid Unnecessary Hassle – If you’re the forgetful type, stay away from cards with rotating bonus rewards categories. Such cards require you to sign-up for new bonus categories each quarter. And if you don’t, you’re unlikely to earn more than the market average that quarter.
4. When In Doubt, Think Cash Back – You’ll never have to wonder about the rate at which you’re earning rewards with a cash back credit card. You’ll never have to worry about rewards devaluation, either. After all, you’ll be earning rewards in terms of dollars and cents.It’s a different story with points and miles cards, however. It’s hard to tell how much they’re worth. And that’s partly because credit card execs can jack up the number needed for a free flight, hotel room, statement credit, etc., whenever they please.
5. Don’t Rule Out Annual Fees – Often times, cards with annual fees offer better initial bonuses and higher earning rates than free cards. So don’t discount a card simply because it charges a fee, especially if it’s low. Just make sure the extra rewards you’ll earn are worth more than the fixed costs you have to pay.

Back to Top

Detailed Rewards Policies By Issuer

 

Qualifying Factor	Max Points	American Express	Bank of America	Barclays	Capital One	Chase	Citi	Discover	PNC Bank	US Bank	Wells Fargo	Fifth Third Bank	USAA	Navy Federal Credit Union	TD Bank	First National Bank	BB&T	Pentagon Federal Credit Union	SSFCU	Alliant Credit Union	BECU
Offers Automatic Program Enrollment	1.0	1.0	1.0	1.0	1.0	1.0	1.0	1.0	1.0	1.0	1.0	1.0	1.0	1.0	1.0	1.0	1.0	1.0	1.0	1.0	1.0
Offers 100% Transparency In Displaying Redemption Rate Details For Non-Members	1.0	1.0	0.3	0.0	0.6	0.0	0.3	0.3	0.7	0.3	0.0	0.0	0.5	1.0	0.0	1.0	0.0	0.0	0.3	1.0	1.0
Does Not Advertise Points/Miles Cards as Cash Back Cards	1.0	0.6	1.0	1.0	1.0	0.6	1.0	1.0	1.0	1.0	1.0	0.0	1.0	1.0	0.5	0.0	1.0	1.0	1.0	1.0	1.0
Issuer Informs Customer of Remaining Rewards at Time of Account Closure	1.0	1.0	1.0	1.0	1.0	1.0	1.0	1.0	1.0	1.0	1.0	1.0	1.0	1.0	0.0	0.0	0.0	1.0	0.0	0.0	1.0
No Minimum Spending Required To Earn	0.5	0.5	0.5	0.5	0.5	0.5	0.5	0.5	0.5	0.5	0.5	0.5	0.5	0.5	0.5	0.5	0.5	0.5	0.5	0.5	0.5
No Overall Earning Limit Imposed	1.0	1.0	1.0	1.0	1.0	1.0	1.0	1.0	1.0	1.0	1.0	1.0	1.0	1.0	1.0	1.0	1.0	1.0	0.7	1.0	1.0
Earning Rate Does Not Vary Depending On Amount Spent or Time Period	1.0	0.2	0.7	1.0	1.0	0.8	1.0	0.3	1.0	0.8	0.3	0.0	0.8	1.0	1.0	1.0	0.0	1.0	1.0	1.0	1.0
No Sign-up Required for Bonus Categories	1.0	1.0	1.0	1.0	1.0	0.8	1.0	0.5	1.0	0.8	1.0	1.0	1.0	1.0	1.0	1.0	1.0	1.0	1.0	1.0	1.0
Ability to Combine Earnings Across Your Accounts	0.5	0.5	0.5	0.0	0.3	0.5	0.4	0.4	0.3	0.3	0.5	0.5	0.5	0.0	0.0	0.5	0.5	0.0	0.5	0.0	0.0
Ability to Share Earnings With Other Members	0.5	0.0	0.3	0.0	0.3	0.5	0.4	0.4	0.0	0.5	0.5	0.5	0.5	0.0	0.0	0.5	0.5	0.0	0.0	0.0	0.0
Earnings Are Granted Despite Account Inactivity	0.5	0.5	0.5	0.5	0.5	0.5	0.4	0.5	0.5	0.5	0.5	0.5	0.5	0.5	0.5	0.5	0.5	0.5	0.5	0.5	0.5
Earnings Are Granted Despite A Missed or Late Payment	0.5	0.0	0.5	0.5	0.5	0.5	0.5	0.5	0.5	0.0	0.0	0.5	0.5	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Earnings Do Not Expire By Date	0.5	0.5	0.5	0.5	0.5	0.5	0.5	0.5	0.3	0.2	0.2	0.0	0.5	0.4	0.5	0.3	0.0	0.0	0.3	0.0	0.0
Expired Earnings Can be Reinstated (Free of Charge)	0.5	0.5	0.5	0.5	0.5	0.5	0.5	0.5	0.3	0.1	0.5	0.5	0.5	0.4	0.5	0.3	0.0	0.0	0.2	0.0	0.5
Ability to Utilize Transfer Partners	1.0	0.3	0.0	0.0	0.0	0.4	0.4	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Ability to Utilize Transfer Partners is Free of Charge	0.5	0.0	0.0	0.0	0.0	0.3	0.4	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Ability to Use Earnings to Offset Any Travel Purchase or Receive Cash Back Without Sacrificing Value	1.0	0.4	1.0	1.0	1.0	1.0	0.5	1.0	0.7	1.0	1.0	1.0	1.0	0.8	1.0	1.0	1.0	1.0	1.0	1.0	1.0
Statement Credit Can Be Applied to Full Balance (instead of matching to specific charges)	0.5	0.2	0.5	0.5	0.5	0.5	0.5	0.5	0.5	0.5	0.5	0.5	0.5	0.5	0.5	0.5	0.5	0.5	0.5	0.5	0.5
No Minimum Threshold Required to Redeem For Cash Back	1.0	0.0	0.0	0.0	1.0	0.2	0.0	1.0	0.7	0.3	0.0	0.0	0.5	0.3	0.0	0.0	1.0	0.0	0.0	0.0	0.0
Offers Automatic Redemption of Earnings	0.5	0.0	0.3	0.0	0.3	0.0	0.0	0.0	0.0	0.0	0.5	0.5	0.5	0.0	0.0	0.3	0.0	0.0	0.0	0.0	0.0
Offers Low Redemption Value Volatility	1.0	0.8	0.8	0.0	0.6	0.5	0.4	0.7	0.7	0.4	0.4	1.0	0.8	0.8	1.0	0.9	1.0	1.0	0.9	0.8	1.0
Rewards Value Per $1 Spent	5.0	4.0	5.0	5.0	5.0	5.0	5.0	5.0	5.0	5.0	5.0	4.0	3.0	5.0	4.0	4.0	3.0	5.0	4.0	5.0	4.0
TOTAL SCORE	21	13.97	16.97	15.00	18.10	16.62	16.5	16.5	16.7	15.3	15.4	14.0	16.1	16.1	13.0	14.2	12.5	14.5	13.37	14.3	15.0
PERCENTAGE SCORE*	100%	66.5%	80.8%	71.4%	86.2%	79.1%	78.7%	78.3%	79.4%	72.8%	73.3%	66.7%	76.4%	76.4%	61.9%	67.4%	59.5%	69.0%	63.7%	68.1%	71.4%

*Percentage Score is calculated by dividing the Total Score by 21 points.

Back to Top

Methodology

This report analyzed the rewards credit cards offered by the 20 largest credit card issuers, by outstanding balances. Information about each issuer’s non-cobranded consumer rewards cards was collected from the issuers’ websites. Once data collection was complete, we scored each card using the rubric listed below, which is comprised of four main categories:

1. Eligibility & Transparency – Max 4 points
2. Earning Policies – Max 6.5 points
3. Redemption Policies – Max 5.5 points
4. Rewards Value Per $1 Spent – Max 5 points

We averaged the individual scores for each issuer’s cards to arrive at overall issuer scores, which we then converted to percentages. Finally, we reached out to the public relations departments of each issuer to confirm our findings, and all of them did so. Data is accurate as of May 14st, 2018.

Rewards Value Per $1 Spent - Max 5 pointsTotal - Max 21 points

Qualifying Factor	Maximum Amount of Points Awarded	How To Calculate Points Awarded
Eligibility & Transparency - Max 4 points
Offers Automatic Program Enrollment	1	Award max point if the card qualifies for this factor.
Offers 100% Transparency In Displaying Redemption Rate Details For Non-Members	1	Award max point if the card qualifies for this factor.
Does Not Advertise Points/Miles Cards as Cash Back Cards	1	Award max point if the card qualifies for this factor.
Issuer Informs Customer of Remaining Rewards at Time of Account Closure	1	Award max point if the card qualifies for this factor.
Earning Policies – Max 6.5 points
No Minimum Spending Required To Earn	0.5	Award max point if the card qualifies for this factor.
No Overall Earning Limit Imposed	1	Award max point if the card qualifies for this factor.
Earning Rate Does Not Vary Depending On Amount Spent or Time Period	1	Award max point if the card qualifies for this factor.
No Sign-up Required for Bonus Categories	1	Award max point if the card qualifies for this factor.
Ability to Combine Earnings Across Your Accounts	0.5	Award max point if the card qualifies for this factor.
Ability to Share Earnings With Other Members	0.5	Award max point if the card qualifies for this factor.
Earnings Are Granted Despite Account Inactivity	0.5	Award max point if the card qualifies for this factor.
Earnings Are Granted Despite A Missed or Late Payment	0.5	Award max point if the card qualifies for this factor.
Earnings Do Not Expire By Date	0.5	Award max point if the card qualifies for this factor.
Expired Earnings Can be Reinstated (Free of Charge)	0.5	Award max point if the card qualifies for this factor.
Redemption Policies – Max 5.5 points
Ability to Utilize Transfer Partners	1	Award 0 points if card has no ability, 1/3 points if card has 1-10 transfer partners, 2/3 points if card has 11-20 transfer partners or 1 point if card has 21+ transfer partners.
Ability to Utilize Transfer Partners is Free of Charge	0.5	Award max point if the card qualifies for this factor.
Ability to Use Earnings to Offset Any Travel Purchase or Receive Cash Back Without Sacrificing Value	1	Award max point if the card qualifies for this factor.
Statement Credit Can Be Applied to Full Balance (instead of matching to specific charges)	0.5	Award max point if the card qualifies for this factor.
No Minimum Threshold Required to Redeem For Cash Back	1	Award max point if the card qualifies for this factor.
Offers Automatic Redemption of Earnings	0.5	Award max point if the card qualifies for this factor.
Offers Low Redemption Value Volatility	1	Where possible, we took the average redemption values for these categories: travel, cash back, gift cards & merchandise, and subsequently, calculated the variance across them. Award 1 point if the variance is 0, 0.8 points if the variance is under 2%, 0.6 points if the variance is under 3%, 0.4 points if the variance is under 6%, 0.2 points if the variance is under 7% and 0 points if the variance is 7% or more.
Rewards Value Per $1 Spent*	5	≤ $379 = 0 $380 – 569 = 1 $570 – 759 = 2 $760 – 949 = 3 $950 – 1,139 = 4 $1,140 + = 5

*Rewards Value Explanation:

We identified the best card from each issuer by calculating the two-year monetary value of each offer’s rewards (including initial bonuses), minus any annual fees.

When calculating the card’s rewards value, we picked the best redemption option – travel, gift cards, cash back or merchandise – and used the average value for that redemption option to convert rewards currency into dollar terms.

We used the following spending data from the U.S. Bureau of Labor Statistics, which you can find below, to calculate each card’s monetary value. Exact values were used whenever possible, but in certain cases – such as “Travel” – we combined categories such as “Airlines,” “Hotels,” “Other Lodging” and “Public and Other Transportation” to create a more digestible list. We assumed that half of one’s utility expenses would be charged to a credit card, as certain types – electric bills, for example – typically aren’t plastic plastic-eligible. “Other” spending represents the sum of small household spending categories: healthcare, apparel and housekeeping supplies, for instance.

Annual Consumer Spending By Category

Category	Annual Spending
Gas	$1,909
Groceries	$4,049
Restaurants	$3,154
Hotels	$798
Airfare	$623
Entertainment	$2,913
Drug Stores	$707
Utilities	$1,384
Movies	$118
Other	$16,355
Total	$32,010

Sources: U.S. Bureau of Labor Statistics (Consumer Expenditures in 2016 Report).

Ask the Experts

1. What do you think what are the characteristics of a good rewards program? Does this differ between consumer and business credit cards?
2. Based on your knowledge of the market, how does reputation mesh with reality in terms of each major issuer’s rewards program?
3. When should consumers first start focusing on rewards credit cards?
4. How do credit card rewards programs make credit card companies money?

< >

• Morgan Ward Assistant Professor of Marketing at Southern Methodist University, Cox School of Business
• Brad D. Carlson Associate Professor of Marketing at Saint Louis University, John Cook School of Business
• Hooman Estelami Professor of Marketing at Fordham Schools of Business
• Alexander Chernev Professor of Marketing at Northwestern University, Kellogg School of Management
• Catharine M. Curran Associate Professor of Marketing in the Charlton College of Business at University of Massachusetts Dartmouth

Morgan Ward Assistant Professor of Marketing at Southern Methodist University, Cox School of Business What do you think are the characteristics of a good rewards program? Does this differ between consumer and business credit cards? A good rewards program is relevant. That is, the rewards need to mean something to the consumer. The rewards need to be attainable and differentiated. That is, people need to, at some point, actually procure a reward and also feel that the reward is somewhat unique to the card they are using. Also, the reward has to be clearly understood and expressed to the consumer. We only use things that we understand! When should consumers first start focusing on rewards credit cards? I think the rewards programs should be secondary to interest rates when consumers are choosing an appropriate card. Sometimes, a credit card will offer compelling rewards but it’s at the cost of the financial health of the customer insofar as the customer has to incur high interest rates and penalties for non-payment. How do credit card rewards programs make credit card companies money? Not my area of expertise, but my understanding is that the reward providers pay the credit card companies for the opportunities to provide the rewards. It is a marketing cost like any other and it gets these companies access to leads that they can parlay into a longer term relationship with a customer. Brad D. Carlson Associate Professor of Marketing at Saint Louis University, John Cook School of Business What do you think are the characteristics of a good rewards program? Does this differ between consumer and business credit cards? Great reward programs are those that provide meaningful added value to consumers, while simultaneously building the brand and fostering stronger connections between the consumer and brand. In order to develop a reward program that delivers this kind of value, it is imperative that a company truly understands the desires and needs of their core customers, and this requires effective market segmentation, target marketing, and positioning (i.e., making sure consumers perceive a meaningful difference between your reward program and your competitors). The best way you can develop a reward program that will truly incentivize consumers to use your card more frequently is to make it reasonable for them to achieve rewards that matter to them on some emotional level. The Southwest Visa card is a good example of this. Of course it provides points that can be redeemed for flights. However, what it delivers on an emotional level as a result of being able to travel more frequently is an opportunity to create memories and experiences...an unexpected getaway with a significant other, meeting up with your best friends for a weekend getaway, taking your family to see their grandparents. Not surprisingly, this ties in well with their long running slogan "You are now free to move about the country." Although the specific tactics used by consumer and business cards may differ, the strategy should be the same...identify an unmet want or desire that is important to your core group of customers and then develop a reward program that helps satisfy those wants. Most importantly, as consumers use your card more frequently and consistently, they should derive more substantial rewards. When should consumers first start focusing on rewards credit cards? I think the best advice for consumers is to avoid using credit cards unless you have the resources and restraint to pay your balance in full each month. If you decide that using a credit card is the right choice for you, be sure to spend some time getting acquainted with the variety of reward programs offered. If you are going to use a credit card, it makes sense to choose one that will offer you some type of reward for doing so and the Internet makes it very easy to quickly find information about various cards, their reward programs, and any related fees. Ultimately, try to pick a reward program that best fits your interests and lifestyle. How do credit card rewards programs make credit card companies money? There are many ways that reward programs make money for credit card companies. To begin, credit card companies make money every time a consumer uses their card to make a purchase. For each purchase, the card issuer receives a payment of one to three percent of the transaction amount. Given that reward programs are intended to increase the frequency with which consumers use their card, the result is increased fees collected from retailers. Additionally, credit card companies make significant profits from a variety of fees - annual fees, cash advance fees, balance transfer fees, late fees - and these fees are more likely to come into play for consumers who actively use reward programs. For instance, although not all cards charge an annual fee, those that do tend to have the best reward programs. Given that increased use of a card with a reward program will result in greater rewards, consumers are more likely to accumulate debt on these cards as they feel that the cost of doing so is offset by the rewards achieved. Consider that in April 2014, the average U.S. household credit card debt, for those households carrying debt, exceeded $15,000, with average credit card interest rates around 15%, and those rates increase if you have late payments. Taken together, it becomes evident that credit card companies make money on nearly every dollar you spend. The more appealing they can make it for you to use your credit card, the more likely it is they will eventually earn additional profits from increased fees. Hooman Estelami Professor of Marketing at Fordham Schools of Business What do you think are the characteristics of a good rewards program? Does this differ between consumer and business credit cards? The main characteristic that a good rewards program has is its relevance to the consumption patterns of the cardholder. Programs that align their reward points to the purchase behavior of the buyer, for example with respect to product categories dominant in the shopping basket, tend to benefit consumers most, and at the same time bring higher transaction volume to the cardholder. The nature of this relationship has to be researched closely through analytics to find the right matching customer for the right program. Based on your knowledge of the market, how does reputation mesh with reality in terms of each major issuer’s rewards program? Reputation does not have to be an indicator of a good program. In fact, research on brand positioning in certain financial markets shows that brands with higher reputation levels do not always offer the better deals. This is simply because they are able to benefit from the recognition associated with their brand names and consumers tend to trust them for the same reason, yet they may receive a less competitive offer simply because they have been mesmerized by the brand. How do credit card rewards programs make credit card companies money? Increased transaction volume translates into higher fees collected from the sellers. Increased transaction volume also translates into more opportunities for charging interest on balances, and other forms of fees. Partnerships can also result in revenue generation for the credit card companies. Alexander Chernev Professor of Marketing at Northwestern University, Kellogg School of Management What do you think are the characteristics of a good rewards program? Does this differ between consumer and business credit cards? Successful loyalty program create value both for customers and the company. For customers, loyalty programs can create three types of benefits: (1) functional benefits, such as extended shopping hours (e.g., Costco) and access to special offerings; (2) monetary benefits, such as cash back or points; and (3) psychological benefits, such as sense of belonging, affiliation, or exclusivity. For companies, loyalty programs create value by (1) increasing customer loyalty and purchase quantity, (2) providing companies with data reflecting the behavior of each individual customer, and (3) enabling the company to conduct one-on-one communications and develop customized special offerings/promotions Catharine M. Curran Associate Professor of Marketing in the Charlton College of Business at University of Massachusetts Dartmouth What do you think are the characteristics of a good rewards program? Does this differ between consumer and business credit cards? Good rewards programs are those that members view as relevant and motivate consumers; they can build brand loyalty. This can be accomplished by having very clear stages to the rewards and multiple paths to get to that reward. If the path is too long or if there is some vagueness to the pathway, then consumers quickly lose interest. Getting quickly to the first reward can be very motivating. Bonus rewards along the way, little "surprises" are quite motivating especially if they are unexpected. The psychology of this is pretty compelling if you give someone a gift there is an obligation created so the return on this investment can be surprising. Consumers want to feel that the program understands their needs and preferences, makes them feel unique and special (ex. dedicated customer service for rewards members). The more rewards can be customized the better. But clarity is the most import feature: what is necessary to achieve this reward? Can I clearly track my progress toward that reward? Once I reach that reward are there any other hurdles I have to cross to use that reward? The redemption process should be seamless. Research has shown that there are age effects, with millennials interested in different types of reward than baby boomers. Millennials like programs they can interact with through social media and through digital apps. Baby Boomers prefer different forms of interaction. Millennials are also more interested in rewards that are both relevant to them as well as socially beneficial. For example, the ability to earn reward points for Habitat for Humanity or other social cause that is relevant to them along with their personal rewards is very attractive (think Toms Shoes). The ability to pool and share rewards is also important to millennials. The other issue on which millennials and boomers differ is on privacy and security of personal data. Many millennials complain about the amount of information required to apply for programs; they are concerned about how this information is being used and who this information is being shared with. It is important that rewards programs recognize the difference between the age cohorts in how they structure their programs and address these concerns. Business cards face the above issues as well as an understanding of the two audiences: the user and the business. If multiple employees are using the card then the benefits often accrue to the business and not to the user. Motivating the user to continue to use the card could be an area that is ripe for exploration. Based on your knowledge of the market, how does reputation mesh with reality in terms of each major issuer’s rewards program? Reputation is extremely important, again especially for millennials. Having firms that are value congruent with them is a key motivator for millennials. It is important that firms use social media to disseminate their foundation work and social responsibility commitments. Again, with the concern about privacy, the firm’s reputation for maintaining customer privacy is very important. There was some interesting research done by Dan Ariely about the mere presence of the Visa logo on the door of a restaurant and how that influenced purchase decisions. When should consumers first start focusing on rewards credit cards? As recent stories in the news have reported, millennials are much more likely to use a credit card for all purchases, even those under $5, than any prior generation. The stated reason for using the credit card is ease of use, followed by rewards programs - the ability to get "free stuff" just by spending what they usually spend. The key here is to have a card that is universally accepted. Cash only businesses pose an issue for millennials and how they prefer to shop; if a credit card can be used to access cash (without excessive charges) that would be a true plus for millennials. Many parents now use the refillable cash cards such as Visa Buxx cards for their teenagers and new college students. These cards get young people used to spending money on cards rather than carrying cash. Allowing the user and the parent to build rewards using these cards could be a very powerful tool for building loyalty. Reward cards in other words are trending younger. Looking at card ownership, many milleninals start by getting a retailer credit card which increasingly are Visa or Mastercard. How do credit card rewards programs make credit card companies money? The primary way is through loyalty and usage. By building loyalty, people are willing to pay annual fees and building the propensity to use the card; the credit card companies make money on each use of the card. The more the consumer uses the card the more the credit card company makes. By giving bonus rewards for using the card at certain types of retailers or for certain types of purchases, the credit card companies can incentivize users to shop at certain retailers. By establishing these symbiotic relationships between retailers and card issuers, both sides benefit from the rewards programs: the card companies by offering attractive rewards and the retailers by driving traffic to the store or website.

from Wallet HubWallet Hub


via Finance Xpress