Dive Brief:
- Customers are seeking simple cash-back rewards from their credit card companies, according to a J.D. Power study released earlier this month.
- Nearly 3 in 5 cardholders use cash-back rewards compared to just shy of one-third of customers who use points from miles cards. Those with cash-back rewards say they redeem their points more frequently than those with points or miles.
- With signs of strain on customers’ financial health, credit card holders are looking for simple cash-back rewards and cards with low APRs. Difficult economic conditions are leading to “high levels of revolving credit card debt, declining levels of financial health and a migration away from points/miles cards,” John Cabell, managing director of payments intelligence at J.D. Power, said in a prepared statement.
Dive Insight:
Credit card holders’ preference for simple cash-back rewards follows a trend seen among loyalty program members for simpler, easy to redeem rewards.
A Deloitte survey from earlier this year found that more than 3 in 5 consumers seek simple cash-back loyalty programs. This summer, Foot Locker simplified its loyalty program and added a cash-back element in response to some customers feeling cash-strapped and indicating they wanted simplified offerings.
Credit card issuers are looking at a similar demand from customers. With more than half of credit card holders’ considered financially unhealthy, J.D. Power has seen consumer behavior shift toward simple cash-back benefits. Financially unhealthy consumers’ use of points or miles cards dropped to 27% in 2024, down from 31% last year, while the use of cash-back and value cards increased.
Though overall customer satisfaction with credit card companies dropped 2 points on J.D. Power’s 1,000-point scale, satisfaction among those with poor financial health is significantly lower. Among those credit card holders carrying debt, overall satisfaction is 61 points lower than those without debt.
This creates a challenge for credit card companies that have two subsets of customers: those who are squeezed by economic pressures and the other that is not. Card issuers must be able to offer options that deliver value for both segments, Cabell said.
