Consumers Opt for Credit Card Rewards

A new study has revealed that UK credit cards offering reward schemes have overtaken credit cards offering 0% deals in the popularity stakes. It now appears that UK consumers are shunning the once popular 0% balance transfer deals as most credit card issuers implement charges for such deals.

According to credit card giants Morgan Stanley, 21% of UK card holders have a card that offers cashback for the card holder compared with 17% who have opted for a card offering 0% interest on balance transfers and/or purchases.

The study also revealed that 15% of card holders earn and collect loyalty points for using their cards. These points can be redeemed in high-street stores or as airmiles, for example. Some loyalty schemes offer points that can be redeemed with a card’s partner such as Amazon.

In the UK, the over 50’s are the age group who are keenest to have a card that offers loyalty rewards, with 18% using cards that offer rewards as opposed to 7% of under the age of 30.

Older consumers are also more likely to have a credit card that offers airmiles as a reward for regular use of the card.

Younger consumers appear to want instant benefits with their credit cards as 18% of those under 30 are more tempted with 0% interest deals from their card. Of those aged between 30-50, 17% have a 0% interest card in their wallet with 17% of over 50’s have o% interest cards.

When it comes to the sexes, UK male consumers are more likely to opt for cards that offer cashback while female consumers are tempted by cards that offer retail reward cards.

Patrick Muir, marketing director for the Morgan Stanley Credit Card, said: “ We are seeing a shift in the dynamics of the credit card market as cardholders wise up to the long-term benefits of reward cards and turn their backs on short-term offers.

“ We have found that an increasing number of our customers are using their credit cards for everyday purchases such as groceries and petrol to benefit from cash back and rewards.”

As the number of credit cards offering 0% interest deals dwindle, UK consumers are now searching for those deals that will offer future rewards for regular use.

Alisdair Miton
6th September 2006

More Information:

• Loyalty Programmes
  Brief article on the financial benefits that the consumer can benefit from by the use of credit cards.
• Cash Back or Rewards
  In the battle for new customers, credit card companies are offering to reward users for simply spending on their cards. The two most attractive systems seem to be cash back and rewards.
• Make Money Using Credit Cards
  It may seem odd that a financial product designed to offer credit can actually make users money in the process, but it’s perfectly possible. Here is our definitive guide on how to earn extra money while using credit cards.

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