‘Work the Perks’ Becomes Cardholders’ Inflation-Fighting Strategem
By Steve Cocheo, Senior Executive Editor at The Financial Brand
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Vying for the dinner bill is becoming a behavioral norm, in banker Courtney Mitchell’s experience. Not that diners are fighting to pick up the whole check. In their quest to max their points or cash back, they want the total balance to go on their rewards-earning card, with reimbursement from their fellows later via cash or P2P account.
In fact, Mitchell, head of credit card and unsecured lending at Citizens Bank, recently had a relative intercept her card when waitstaff came for payment after a family feed. He tossed her card back to her, and pulled out his own plastic.
“‘You think you’re getting this? This is mine‘,” recounts Mitchell. “He still expected me to Venmo him my share — he just wanted the rewards.”
Key insight: Consumer research by Citizens indicates that people trying to better manage their finances are working the perks on their credit cards harder than ever to make their money go further.
Squeezing more value out of everyday spending and planned major purchases, has them weighing more carefully which card to use, according to the study. The research suggests that the typical consumer’s primary card is garnering a greater portion of their spending, as they seek the best payoff.
Need to Know:
- Just over half of cardholders surveyed by Citizens see card perks as a means to get more out of spending they already do, versus extra spending to gain perks.
- 55% say that perks matter more than they did three years ago, in terms of which card to use.
- 41% of cardholders say getting more rewards frequently or always influence their choice of where to eat, shop or spend. But this is much more common among Gen Zers — 72% there.
- 76% of households with annual income of $150,000 or more prioritize which card to use on the basis of rewards rate or cash back. By contrast, 58% of households earning below that amount do so.
- 34% say they’ve used card perks to free up cash they would have spent, otherwise, enabling them to pay down some debt. 27% add to savings and investments because perks enable them to spend somewhat less.
- A significant portion of cardholders say that perks enable them to counter social pressure when they are expected to travel eat out (39%), travel (33%) or buy gifts (25%). This feeling was strongest among Gen Z cardholders.
What Cardholders Prize Most — and Expect
The study came in the wake of Citizens’ year-ago revamp of its card lineup, before Mitchell joined the bank. She said Citizens wanted to get a fresh take on what cardholders consider important.
“Rewards used to be more of a differentiating factor, but now they’ve become an expectation among consumers,” says Mitchell. “They know now that they can get value out of cards and if it’s not with their issuer, they can find it elsewhere.”
She also believes that the increasing prevalence of card surcharges causes customers to expect still more out of their cards.
When asked what feels like the biggest win, 36% of consumers said using perks to get the same experience for less did it for them. Another 26% said scoring something “premium,” without touching their savings, was their thrill. And 14% like upgrades on travel, dining and entertainment.
Read more: The Smartest Rewards Programs Now Begin with Everyday Spending
Aspiring to Bigger Payoffs from Spending Streams
Still, many higher-income consumers — those making $150,000 or more — worry they are missing out. Only 11% feel they are maxing their perks, while 26% of those respondents making under $150,000 think they are getting it all.
That’s quite a difference, although it also suggests that most consumers still don’t feel like they are getting all they could be out of their rewards.
Key insight: Mitchell believes the large difference between the two income groups hinges on the types of cards each group tends to carry.
Higher-income customers tend to carry premium cards, which come with numerous deals, features, special offers and more that can be difficult to manage. She says she has one herself and doesn’t feel like she gets the highest value out of it.
By contrast, she continues, consumers in the lower-income group gravitate towards more basic rewards cards, such as those stressing cash back.
“With those, you’re able to see more directly what you’ve spent and the reward value,” says Mitchell.
Action item: For issuers, more attention to marketing communication could improve those percentages and help focus people on each issuer’s card benefits, according to Mitchell. She says initial marketing pitches generally give the full list of perks. However, Mitchell thinks this ought to be followed up with outreach about benefits right after signup.
A mobile app that tracks perks used and perks pending can provide an ongoing picture of what’s still on offer for cardholders trying to decide which card to spend with, says Mitchell.
Read more: How Amex is Using GenAI to Augment Human Service for the Platinum Card Customers
Keep Stoking the Card Engine
Ongoing lifecycle management is critical, according to Mitchell. This include pro-active periodic reminders of selected benefits, but also reactive ones triggered by cardholder behavior that indicates that the customer is leaving value on the table.
One-time events, such as VIP access at entertainment venues, offers a special opportunity to reengage cardholders with the issuer, Mitchell says.
For its premium Summit Reserve card, in July the bank offered a Summit Reserve event in conjunction with the Major League Baseball All-Star Game at Philadelphia’s Citizens Bank Park. Among the perks were meet-and-greets with Phillies players, a pre-game gathering, and deeply discounted tickets to the game itself.
Lounges are now table stakes. Unique access to events is still somewhat on the leading edge, says Mitchell, while access to airport lounges, leading-edge a decade ago, is becoming an expectation on premium cards.
She notes that while Citizens can’t maintain its own networks of lounges as do American Express, Chase Sapphire and Capital One, it does offer access to an independent brand — Priority Pass — on its Summit Reserve Word Elite Mastercard. There, Citizens cardholders get a free membership and four free visits annually.
Read next: How Ally Aims to Push Its Primacy Appeal with Checking and a New Rewards Program
