Are Rewards Programs Rewarding?

Rewards is a primary driver of switching and selection in the credit card industry. This is especially true among Transactors,(1) who cite rewards as the primary reason for selecting their primary card, as well as the primary reason for leaving their previous credit card issuer. Notably, rewards has also become an important driver of selection and defection among Revolvers.(2)

According to the 2012 J.D. Power and Associates US Credit Card Satisfaction Study, during the past 3 years, the percentage of Revolvers who have shopped for a better rewards program has increased (27% vs. 25% in 2011 and 23% in 2010). Rewards programs are now the second-most-important reason why Revolvers have switched credit card issuers in 2012, behind only a low APR, which is down to 28% from 43% in 2010. As with switching, selection is also driven by rewards, as the rewards program is the primary reason Transactors selected their new card (72%) and the second-most-important reason Revolvers selected (33%), following a lower APR (37%).

So yes, rewards programs are rewarding for both customers and issuers!  In fact, overall satisfaction is significantly higher among customers who have a rewards program than among those who do not have a rewards program (770 vs. 700, respectively). More importantly, rewards programs have a positive impact on customer advocacy and retention, as customers with rewards are considerably more likely to say they “definitely will” recommend their credit card issuer, compared to those without a rewards program (30% vs. 18%, respectively), and are considerably less likely to switch primary credit card issuers (31% vs. 23% “definitely will not” switch).

Rewards programs also have a positive impact on both customer spend and usage. On average, customers with rewards programs spend in excess of three times more per month on their primary card and conduct nearly three times the number of transactions per month than do those without a rewards programs.

2012 J.D. Power and Associates U.S. Credit Card Custom Satisfaction Study©.  The McGraw-Hill Companies, Inc. All Rights Reserved.

Make sure they Understand the program

Not clearly communicating a card’s rewards program may have a larger detrimental impact on satisfaction vs. not offering a rewards program at all. Satisfaction is lower among customers who say they do “not at all” understand how rewards are earned than among those who do not have a rewards program associated with their card. Moreover, satisfaction among customers who either “partially” or do “not at all” understand how to redeem rewards is lower than among those without a rewards program (692 vs. 700, respectively). Consequently, it is critical that customers are aware of how rewards are earned and even more critical that they understand how rewards are redeemed. ©

The Bottom Line:

  • Rewards during the past 3 years has become a main driver of selection and satisfaction among Revolvers, who historically have selected cards based on APR.
  • The root cause of  reward dissatisfaction is a lack of clarity regarding what rewards can be earned…..which is driven by vague and confusing messaging on billing statements and online Web portals.
  • Keep rewards programs simple, display rewards earned, provide information on reward promotions and special offers; and implement and/or promote rewards tracking tools via the Web portal.
  • When there are different rates at which rewards are accumulated based on purchase categories,  clearly communicate them to customers via billing statements, website, and email.

FOR MORE INFO regarding our 2012 US Credit Card Customer Satisfaction Study, please contact Holly Zagresky at (248) 680-6319 or via email at

1 Transactors are customers who always or usually pay their entire credit card balance each month.
2 Revolvers are customers who typically pay less than their total monthly balance.
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