Joel Stanton, Senior Research Manager at Lightspeed Research, told Loyalty 360 that coming out of the “Great Recession” in 2007-08, there were dire predictions about credit cards “getting hammered and rewards programs would go away.” But, that’s the funny thing about predictions – they all too often don’t come true.
“I think we can safely say the opposite has happened,” Stanton said. “Credit card rewards have emerged stronger than ever. Most consumers are taking advantage of them. There has been strong overall credit card usage since the Great Recession in most consumer categories.”
Stanton said some of those dire predictions didn’t come to fruition. And The Durbin Amendment, following the Great Recession, caused many of the larger banks to move quality consumers over to credit “as much as possible. The economics of it were debit wasn’t as economically strong as it once was so let’s incent people in a positive way through strong rewards programs.”
Stanton said Lightspeed Research has a database of about 10,000 U.S. consumers who have allowed the company access to their credit card statements.
“It’s a cool insight into actual usage, credit lines, rewards people are earning, and at a broad level we can see how rewards track for folks over time and we can see how loyal people are to various cards as well,” Stanton said.
Stanton said the general cash back rewards for credit cards now is about 1.2%, but you can find as high as 1.5% to 2%.
“From a consumer side of things, they’re spending again,” Stanton said. “At this point I’m not all that surprised at where we’re at. The bottom never truly fell out. It’s been a slow and steady climb, but it has taken time.”
Stanton said 2012 showed a year-over-year increase of about 10% in active credit card accounts.
“From here, I think there will be slow, but steady improvement,” he said. “This is the strongest bump we’ve seen since before the Recession. We are definitely seeing rewards offerings for new accounts and ongoing rewards for current customers. There is a strong loyalty reward improvement.”
Stanton said cash back rewards are quite popular.
“It’s grown quite a lot in the past few years,” he said. “When people redeem the reward, they don’t redeem for cash back. Just under half actually get cash back. For the rest, they primarily get a gift card.”
When people go through the redemption process for rewards, Stanton said, the most important driver for overall satisfaction is the ease of redeeming any reward.
“If it’s hard in any way, satisfaction drops,” Stanton said. “The redemption process for rewards is key.”