Credit card airline rewards can offer substantial value to frequent travelers, but complicated earning and redemption rules can make that value difficult for consumers to realize. Research cited by The Ascent found that nearly half of airline loyalty program members didn’t know how to use their rewards, while a similarly large share didn’t understand how to earn their miles.
Confusion around blackout dates, redemption restrictions, seat availability, and other program requirements can undermine customer satisfaction and make airline miles less appealing. Meanwhile, simpler alternatives such as cash back rewards have become increasingly popular with cardholders. The shift illustrates an important lesson for card issuers: rewards programs must not only provide value but make that value easy for customers to understand and access.
Are you getting frequent fliers rewards – airline miles – from your credit cards? Have you ever redeemed them? Do you know how the program works?
Silly questions?
Not if you read a recent article from The Ascent from the Motley Fool. This article, 45% of Airline Loyalty Program Members Don’t Know How to Use Their Rewards, cites a recent J.D. Power study that found nearly one-half of those getting airline rewards don’t know how to use them and 43% don’t know how to earn the miles they are supposed to get. As the article points out:
This is a serious issue, both for the airlines and the consumers. Customer satisfaction rates plummet among those who don’t understand how miles work, and if you’re in this category, you won’t be able to get the most value from your travel rewards. To help with that, let’s clear up the confusion regarding earning and redeeming miles.
These findings shouldn’t be all that surprising for people who are familiar with restrictions like blackout dates, steerage seating, and all of the other limitations placed on airline rewards programs. If fact, you may recall Capital One used to run commercials touting the fact that they eliminated all these restrictions. That said, the over-complication of airline rewards programs has, obviously, left a certain part of the population understandably confused.
The article goes on to explain, in simple terms, how to get airline rewards if your card provides them. It also goes on to explain that cash back cards may be the way to go.
Our U.S. PaymentsInsights survey demonstrates that cash back is the most popular reward program feature among cardholders and has been for a number of years. Airline rewards was one of the first notable perks of credit card reward programs, but times have changed and rewards programs have slipped to the middle of the pack.
The dissatisfaction mentioned above has likely led consumers to rethink their rewards programs and find programs that have easier redemption programs produce more overall value.
If you think about it, cahs back suits most people very well. There’s no guessing why it’s number one.
Credit card airline rewards helped establish rewards as an important feature of the credit card market, but consumer expectations have evolved. A valuable rewards program can lose much of its appeal when customers struggle to understand how to earn or redeem their benefits.
The popularity of cash back demonstrates the advantages of simplicity and flexibility. For issuers designing competitive rewards programs, straightforward redemption and clearly communicated benefits can be just as important as the potential dollar value of the rewards themselves.
Overview by Peter Reville, Director, Primary Research Services at Mercator Advisory Group
