*Online Credit Card Seekers Want Their Rewards

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Rewards programs are taking on increasing importance among people seeking credit cards online, according to a new study that compared online credit card seekers with the overall population of online adults.


The study, conducted by Cyber Dialogue Inc., New York, and released for publication exclusively to <I>iMarketing News<I>, reported that 54 percent of people who seek credit card information online said they consider an enticing rewards program to be an important feature of a credit card, vs. 30 percent of the online adult population in general.


"One of the things that is going to be important in differentiating your credit card in the future, we believe, is rewards programs," said Sam Callard, an analyst in the Internet Strategies Group at Cyber Dialogue. "Reward programs are significantly more popular among [those who intend to apply for a credit card online] than among the people who actually have applied."


The study found that 37 percent of the people who said they intend to apply for credit cards online participate in online rewards programs, vs. 15 percent of those that have already applied online.


Other features that credit card seekers favor include low regular interest rates, a trusted name brand, quick approval and a low amount of required documentation.


Although a significant number of credit card seekers are looking for the best rates they can find and are probably easily lured to switch credit cards based on rates, the interest rate will become less and less important compared to rewards programs, Callard said.


The study concluded that about 7.3 million consumers applied for a credit card online, compared rates online or sought information online in 1999. Another 2.1 million were "intenders," or those consumers who had not yet applied for a credit card online but said they planned to do so within the next 12 months.


Credit card offers have high pull-through rates compared to offers for other financial products, Callard said, citing the ability for consumers to both apply and get approved online. In addition, some issuers allow consumers to begin using credit cards within minutes after they apply, before they receive the actual cards in the mail.


Out of the 7.3 million people who were defined as credit card seekers, 4.2 million were estimated to have applied for credit cards online by the end of 1999.


The survey, which polled more than 1,000 adult Internet users, also found that online credit card seekers had several demographic and psychographic features that differentiated them from the online adult population as a whole.


Online credit card seekers are younger, more ethnically diverse and are generally more discriminating credit card shoppers than the population of online adults as a whole, according to the study. It also found that about 66 percent of online credit card seekers are male and 34 percent are female, compared with the 53-percent-to-47-percent male-to-female ratio among adult users of the Internet in general. About 54 percent of credit card seekers fall into the 18 to 34 age bracket, while 40 percent of adult Internet users are part of that age group.


The largest disparity between credit card seekers and the adult online population as a whole is ethnicity. About 35 percent of credit card seekers classify themselves as belonging to an ethnic minority, compared with 20 percent of adult Internet users as a whole.


Callard said the anonymity of the Internet could explain the high proportion of ethnic minorities applying for credit cards online.


"Prejudice doesn't exist" when applying for credit cards online, he said.


He also said that online credit card seekers appear to fall into two groups: young, technology-savvy consumers and older, more financially sophisticated consumers who also are more technologically savvy than their counterparts in the same age group.


The study also revealed details about where credit card users travel on the Internet. Yahoo Finance is the most popular site used by credit card seekers for their personal finances, with 7 percent of the audience, followed by Fidelity with 5 percent. Excite and CBS Marketwatch attracted 4 percent of credit card seekers each, followed by America Online, E*Trade and MSN, with 3 percent each.


Forty-three percent of online credit card seekers said they go directly to known sites for managing their finances online, compared with 23 percent of all adult Internet users. About 24 percent of credit card seekers use keyword searches and 15 percent use portal categories to find sites that help them manage their finances online. About 28 percent used personalized financial sites, and about 11 percent subscribe to paid financial sites.


Among the online customer service features listed as most helpful, having a toll-free number to reach a live person was ranked the highest, rated very helpful by 81 percent. Having a "call me" button on the Web site was rated as very helpful by 53 percent, a frequently asked questions page was rated very helpful by 48 percent, and a chat room for live online support was rated very helpful by 29 percent.


The study also included several details about credit card seekers' personal financial profiles. Among the differences between credit card seekers and the population of online adults: Credit card seekers are more likely to have a considerably higher net worth, $141,100 vs. $115,200 and a lower outstanding loan value, $28,100, vs. $29,800.
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