Credit Cards: Rewards Programs - US - August 2007

Table of Contents

• Scope and Themes
• What you need to know
• Scope of this report
• Abbreviations and terms
• Abbreviations
• Terms
• Executive Summary
• Industry snapshot
• Current marketing trends
• Competitive landscape
• Targeted marketing
• Marketing to males and females
• Marketing to specific age groups
• Marketing to specific income groups
• Mintel' s consumer survey--rewards programs
• Consumers and rewards redemption
• Tracking rewards
• Direct mail acquisition vs. email
• Consumers and contactless
• What' s ahead
• Online and mobile payments
• Other groups
• Market Drivers
• The credit card consumer
• Statistical overview
• Tightening economy impacting payment behavior
• Amount paid off each month
  • Figure 1: Credit card payment behaviors, 2006
• Credit cards and the family budget
• Impact of health/medical expenses
• The credit card and merchants
• Merchants challenging interchange fees, alternatives to major cards
• Alternatives with lower interchange fees
• Credit card rewards programs
  • Figure 2: Rewards types, by issuer, as a percentage of all acquisition mailings offering rewards, January-March 2007
  • Figure 3: Credit cards rewards offers, by income--percentage of mail volume for issuers rewards acquisition mailings, January-April 2007
• No card required--new developments
• Growth of debit rewards--challenge to credit cards
  • Figure 4: Users of debit reward cards, by age, 2006
• Different generations want different rewards
  • Figure 5: Frequency of application for credit card (s), by age, February 2006
  • Figure 6: Credit cards rewards offers, by age--percentage of mail volume for issuers rewards acquisition mailings, January-April 2007
  • Figure 7: Examples of Credit card rewards offerings, by age, June 2007
• Cards for teens and young adults
• Increasing influence of the "Affluent"
• Traits of the super-wealthy
• Merchants increasing rewards for best customers
• Loyalty programs saturating the market
  • Figure 8: Frequency of application for credit card (s), by income, February 2006
• Preferred rewards vary
• Challenges for rewards programs
• Rewards not being redeemed
• Spending and saving
• Rewards offers not especially relevant to consumers
• Consumers more instrumental in driving rewards
  • Figure 10: Preferred rewards, 2004
  • Figure 11: Preferred rewards for redeeming airline programs points, 2004
• Preference for discounts
  • Figure 12: Loyalty program membership, by age, 2004
• Rewards programs encouraging behaviors
• Card usage
• Increasing usage of cards for small payments
  • Figure 13: Fast food purchases by credit card, 2000-06
• Encouraging consumers to transact online
  • Figure 14: Percentage of Internet households paying bills online, 2002-07
  • Figure 15: Online households and online banking households, 2004-10
• Rewards for online bill paying
• Competitive Landscape
• Recent trends
• Cashback reward kings
  • Figure 16: Key cashback rewards programs, by issuer, 2007
• "Multi" opportunities to earn rewards
• Rewarding debit with miles
• Flexible rewards
• "Green" rewards + healthcare
• Mortgage rewards
• Specialty shopper rewards
• Socially conscious and affinity rewards
• "Coalition" or savings rewards
• Cards and rewards for the unbanked
• Contactless cards and benefits
• Cards for business
• Recent trends
• Priorities for small business owners
• New offerings
• Advertising and Promotion
• Direct mail
• Preferred method of responding to direct mail
  • Figure 17: Preferred ways of responding to direct mail, 2003 and 2007
• Segmented advertising
• Television
• Examples of television advertising
  • Figure 18: American Express television advertisement, 2007
  • Figure 19: American Express television advertisement, 2007
  • Figure 20: American Express television advertisement, 2007
  • Figure 21: Capital One television advertisement, 2007
  • Figure 22: Capital One television advertisement, 2007
  • Figure 23: Chase television advertisement, 2007
  • Figure 24: Chase television advertisement, 2007
  • Figure 25: Visa television advertisement, 2007
  • Figure 26: MasterCard television advertisement, 2007
  • Figure 27: Best Western hotels television advertisement, 2007
  • Figure 28: Hyatt Hotels television advertisement, 2007
  • Figure 29: Hyatt Hotels television advertisement, 2007
  • Figure 30: Crown Plaza television advertisement, 2007
  • Figure 31: Orbitz television advertisement, 2007
• Interactive TV and email
• Email
• Examples of email marketing solicitations
  • Figure 32: Examples of subject lines ("teasers") for both acquisition and retention email s, January-June 2007
  • Figure 33: Email users as percentage of Internet users and total U.S. population, 2003-10
• Comperemedia SPAM scores
  • Figure 34: SPAM scores for rewards acquisition emails for major card types--percentage of total emails,
• Obstacles to marketing via email
• The Consumer
• Credit card usage
  • Figure 35: Has used a credit card in the last three months, by gender, June 2007
  • Figure 36: Has used a credit card in the last three months, by age, June 2007
  • Figure 37: Has used a credit card in the last three months, by income, June 2007
• Type of card used most frequently
  • Figure 38: Type of credit card used most frequently, by gender, June 2007
  • Figure 39: Type of credit card used most frequently, by age, june 2007
  • Figure 40: Type of credit card used most frequently, by income, June 2007
• What would increase usage?
  • Figure 41: Factors most likely to increase credit card usage, June 2005
  • Figure 42: Factors most likely to increase credit card usage, by gender and age, June 2007
  • Figure 43: Factors most likely to increase credit card usage, by income, June 2007
  • Figure 44: Factors most likely to increase credit card usage, by type of card used most frequently, June 2007
  • Figure 45: Factors most likely to increase usage, by race/ethnicity, June 2007
• Loyalty and concerns
  • Figure 46: Factors most likely to have a negative impact on credit card usage, by gender, June 2007
  • Figure 47: Factors most likely to have a negative impact on credit card usage, by age, June 2007
  • Figure 48: Factors most likely to have a negative impact on credit card usage, by age, June 2007
  • Figure 49: Factors most likely to have a negative impact on credit card usage, by gender, June 2007
• Incidence of reward redemption
  • Figure 50: Number of times rewards have been redeemed, by gender and age, June 2007
  • Figure 51: Number of times rewards have been redeemed, by income, June 2007
  • Figure 52: Number of times rewards have been redeemed, by type of card, June 2007
• Difficulty in redeeming rewards
  • Figure 53: Difficulty in redeeming rewards, by gender and age, June 2007
  • Figure 54: Difficulty in redeeming rewards, by income, June 2007
  • Figure 55: Difficulty in redeeming rewards, by type of card, June 2007
• Tracking rewards
  • Figure 56: Accounting for rewards miles/points earned, by gender and age, June 2007
  • Figure 57: Accounting for rewards miles/points earned, by income, June 2007
  • Figure 58: Accounting for rewards miles/points earned, by type of card, June 2007
• Likely impact of added communication on increasing redemption
  • Figure 59: Likelihood of redeeming rewards if updates are sent, by gender and age, June 2007
  • Figure 60: Likelihood of redeeming rewards if updates are sent, by income, June 2007
  • Figure 61: Likelihood of redeeming rewards if updates are sent, by type of card, June 2007
• Would updates on reward status increase card usage?
  • Figure 62: Likelihood of increasing usage if rewards updates are sent, by gender and age, June 2007
  • Figure 63: Likelihood of increasing usage if rewards updates are sent, by income, June 2007
  • Figure 64: Likelihood of increasing usage if rewards updates are sent, by card type, June 2007
• Likelihood of responding to email ads for credit cards
  • Figure 68: Likelihood of response to an email advertisement offering rewards, by race/ethnicity, June 2007
• Concerns about responding to email solicitations for credit cards
  • Figure 69: Concerns about responding to email solicitations for credit cards, by gender, June 2007
  • Figure 70: Concerns about responding to email solicitations for credit cards, by age, June 2007
  • Figure 71: Concerns about responding to email solicitations for credit cards, by income, June 2007
  • Figure 72: Concerns about responding to email solicitations for credit cards, by card held, June 2007
  • Figure 73: Concerns about responding to email solicitations for credit cards, by race/ethnicity, June 2007
• Likelihood of opening email and direct mail received from own credit card companies
  • Figure 74: Likelihood of opening email and direct mail received from respondents' own credit card companies, by gender, June 2007
  • Figure 75: Likelihood of opening email and direct mail received from respondents' own credit card companies, by age, June 2007
  • Figure 76: Likelihood of opening email and direct mail received from respondents' own credit card companies, by income, June 2007
  • Figure 77: Likelihood of opening email and direct mail received from respondents' own credit card companies, by primary card used, June 2007
  • Figure 78: Likelihood of opening email and direct mail received from respondents' own credit card companies, by race/ethnicity, June 2007
• Making payments using contactless technology
• Overall interest in making payments using contactless technology
  • Figure 79: Interest in contactless technology, by gender and age, 2006 and 2007
  • Figure 80: Interest in contactless technology, by income and race/ethnicity, June 2007
• Interest in mobile payments
  • Figure 81: Interest in contactless technology using a cell phone, by gender and age, June 2007
  • Figure 82: Interest in contactless technology using a cell phone, by income and race/ethnicity, June 2007
• Concerns about mobile payments
  • Figure 83: Mobile contactless technology using a cell phone--concerns about usage, by gender and age, June 2007
  • Figure 84: Mobile contactless technology using a cell phone--concerns about usage, by income, June 2007
  • Figure 85: Mobile contactless technology using a cell phone--concerns about usage, by race/ethnicity, June 2007
• Interest in contactless technology if additional rewards were offered
  • Figure 86: Mobile contactless technology using cell phone--willingness to use if additional reward points/miles were offered, by gender and age, June 2007
  • Figure 87: Mobile contactless technology using cell phone--willingness to use if additional reward points/miles were offered, by income, June 2007
  • Figure 88: Mobile contactless technology using cell phone--willingness to use if additional reward points/miles were offered, by race/ethnicity, June 2007
• Future Trends
• Internet banks
• Mobile banking
• Testing the waters with phone payments
• Small businesses continue as growth area
• Seeking individuality in cards
• Payment alternatives for the "unbanked"
  • Figure 89: Usage of specific credit cards among consumers without bank accounts, 2006
• Potential in marketing to Hispanics
• Women in business good candidates for credit card rewards
• Appendix: Advertising and Promotion
  • Figure 90: American Express Delta SkyMiles direct mail advertisement, Q4 2006
  • Figure 91: Chase direct mail advertisement, Q4 2006
  • Figure 92: Citibank direct mail advertisement, 2006
  • Figure 93: LL Bean Visa direct mail advertisement, 2006
  • Figure 94: Discover email advertisement, 2006
  • Figure 95: Citibank direct mail advertisement
  • Figure 96: Discover card direct mail advertisement, 2006
  • Figure 97: Citi AAdvantage direct mail advertisement
• New product offers -- Q1 2007
  • Figure 98: HSBC "Totally Me" campaign direct mail advertisement, 2007
  • Figure 99: Washington Mutual "Real Rewards" Direct mail advertisement, 2007