Mintel: Reward Cards Still Dominate
According to Mintel, mail volume for all acquisition offers in April was just over 325 million. Of that, 55 percent were for cards with a reward program, up 8 percent from last year.
One reason for the continued success of reward cards is that a growing number of investment firms are offering them, Mintel said.
"We suspect that more consumers are using their investments and savings to pay off high debt or for other expenses, which means that they are taking their money out of investments first and transferring it to credit card issuers," said Eva McLoughlin, lead research analyst at Comperemedia. "This has forced investment firms to realize that they have a gap in their service, and they are now offering credit cards in order to capture as many of their customers' financial transactions as possible."
Pricing of reward cards is similar to non-reward cards, with movement toward lower purchase go to rates. In the first quarter, just under 80 percent fell under 9.99 percent, Mintel said. Starting in November 2003, a larger percentage of cards has offered purchase go to rates under 7.99 percent, driven by MBNA offering 5.9 percent and 7.9 percent fixed rates on its Worldpoint Affinity cards, Mintel said.
Reward programs are growing more sophisticated in how they let customers redeem points. There is a trend toward longer-term rewards targeted to higher spenders that require more points, Mintel said, yet also more "immediate gratification rewards," geared toward lower spenders.