Premium credit cards have traditionally been designed for a specific type of customer: the transactor. These consumers use their cards frequently, generate substantial spending volume, and consistently pay their balances in full each month. While they may not generate significant interest income for issuers, they are often affluent, financially stable, and highly engaged with rewards programs—making them one of the most valuable segments in the credit card industry.
As consumer attitudes toward debt continue to evolve, financial institutions may find themselves competing more aggressively for these customers. For issuers, success will depend on offering compelling premium credit card benefits, personalized rewards, and digital experiences that align with the expectations of today’s mass affluent consumers.
The premium credit card market has always focused on “transactors”—low risk (often affluent) consumers who consistently pay off their balance in full every month and generate revenue through high utilization. As a recent article on the Financial Brand points out, this segment of consumers may be on the rise:
“Post-recession, American consumers are working to rid themselves of credit card debt and are more cautious as a result of increases in unemployment, foreclosures, bankruptcy, and a decrease in home equity.
According to a Federal Reserve study, the number of families with credit card debt decreased from 25% in 2010 to 18% in 2013. According to a 2014 survey from the National Foundation for Credit Counseling, only about one in three U.S. adults say their household has revolving balances, down from 44% in 2009.”
Given this shift in consumer behavior, issuers would be well served to revist their premium card products (and associated rewards programs) to ensure they are well positioned to compete for these customers. This is especially true when you consider that the mass affluent segement frequently targeted for premium card products is not only a low risk for default, but also less expensive to service as they tend to prefer self-service channels (online, mobile, ATM) according to Mercator Advisory Group research.
The premium credit card market is no longer just about extending credit—it is increasingly about deepening customer relationships. As more consumers prioritize financial responsibility and avoid carrying revolving balances, issuers must rethink how they attract and retain high-value cardholders.
Enhanced rewards programs, exclusive benefits, and seamless digital experiences will continue to play a central role in winning the loyalty of affluent consumers. For card issuers, adapting to these changing behaviors could be the key to maintaining growth in an increasingly competitive credit card landscape.
Overview by Alex Johnson, Sr. Analyst, Credit Advisory Service at Mercator Advisory group
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