#Rewards Can Be an FI’s Secret to Success

When deciding whether or not to offer a rewards option, credit card issuers would do well to choose rewards. Cards with rewards drive usage, profitability and, ultimately, consumer satisfaction.

With multiple payment options on the market, credit card issuers continuously search for ways to differentiate their offerings from those of their competitors. The secret lies not with shock-and-awe marketing campaigns or aggressive sales tactics but with something much simpler—rewards.

recent study by J.D. Power found more than half of credit card users select a new card based on its rewards program. Cardholders who are more satisfied with a particular card are likely to reach for that card when making a purchase. For that reason, rewards play a significant role in driving top-of-wallet behaviors.

Too often, however, credit card issuers overlook rewards, questioning their usefulness in driving cardholder profitability. To clearly understand the benefits of rewards, TMG studied 12 months of client data from 2014 to 2015. We examined data from both rewards and non-rewards programs to conclude the following:

  1. Rewards cardholders, on average, spend over 56 percent more than non-rewards cardholders annually.
  2. The average balance for rewards cardholders is 6 percent higher than non-rewards cardholders.
  3. Usage of rewards cards is much more frequent than non-rewards cards. Cardholders with rewards cards performed 58 percent more transactions than non-rewards cardholders.
  4. Average ticket sizes are 18.5 percent higher for rewards cardholders.
  5. Rewards cardholders drive more than 64 percent higher profits.

To learn more about the value of rewards programs, download the white paper “Yes, Credit Card Rewards Really Are Worth It.”