PaymentsJournal
SUBSCRIBE
  • Analysts Coverage
  • Truth In Data
  • Podcasts
  • Videos
  • Industry Opinions
  • News
  • Resources
No Result
View All Result
PaymentsJournal
  • Analysts Coverage
  • Truth In Data
  • Podcasts
  • Videos
  • Industry Opinions
  • News
  • Resources
No Result
View All Result
PaymentsJournal
No Result
View All Result

Credit Card Reward Value Falls 63 Percent Over Past Year

Brian Riley by Brian Riley
September 5, 2017
in Analysts Coverage
0
Credit card attack.

Credit card attack.

0
SHARES
0
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn

 Low Interchange = Low Rewards. In Australia, the first nation to put cost accounting into their standards for interchange, implemented changes to a series of credit card fees; this implemented on September 1. Now reward points are under pressure, an issue Mercator predicted regarding the sustainability of credit card rewards in this recent research note. Without revenue from interchange, rewards are unfundable.


• “I was getting 1.5 frequent-flyer rewards points for each dollar of spend on the credit card and am now getting one point,” De Lorenzo says.

• To add insult to injury, the cap or limit on the monthly spend to get the reward points was dropped from $20,000 to $5000.

• … with the lowering of the spending cap, even if I wanted to buy a car on my card I wouldn’t get a free flight out of it.”

In the US, which has not dealt with the interchange topic on credit cards, it takes about $10,000 in card spending to earn $100, unless you use a card that offers front end incentives. Now, in Australia, it looks like the new model requires almost twice the spend to deliver a third of the value.

• The big banks blame the latest cuts on interchange fee regulations introduced by the Reserve Bank. (of Australia)

• Comparison site Mozo estimates that the average rewards card now delivers just $27 in annual value. That’s based on the estimated average annual spend on a rewards card of $19,000.

So, with your consumer hat on, it is time to maximize the value of your cards with a household budget audit and perhaps a few new selections. With your industry hat, though, it is time to think about Plan B for customer loyalty before the card rewards model becomes archaic.

Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group

Read the full story here

Tags: Credit CardsRewards
0
SHARES
0
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn

    Analyst Coverage, Payments Data, and News Delivered Daily

    Sign up for the PaymentsJournal Newsletter to get exclusive insight and data from Javelin Strategy & Research analysts and industry professionals.

    Must Reads

    cashless payments

    Exploring The Future of Cashless Payments

    June 8, 2023
    debit cards, Gen Z

    Debit Builds Consumer Loyalty Among Gen Z and Other Top Demographics

    June 7, 2023
    check fraud

    Check Fraud: The Threat is Real

    June 6, 2023
    smart banking

    Smart(er) Banking Requires More Than Just Tech

    June 5, 2023
    Google Wallet Expands Features

    Google Wallet Continues to Bet on Digital with Expanded Features

    June 2, 2023
    digital value

    How Embracing Digital Value Can Help Solve the B2C Payments Conundrum

    June 1, 2023
    instant payments, real-time payments, RTP

    Banks Developing Instant Payments Products in the U.S. Should Focus on Billers to Generate New Revenue Streams  

    May 31, 2023
    Digital Wallet Use Delivers on Convenience and Security

    Digital Wallet Use Delivers on Convenience and Security

    May 30, 2023

    Linkedin-in Twitter

    Advertise With Us | About Us | Terms of Use | Privacy Policy | Subscribe
    ©2023 PaymentsJournal.com

    • Analysts Coverage
    • Truth In Data
    • Podcasts
    • Videos
    Menu
    • Analysts Coverage
    • Truth In Data
    • Podcasts
    • Videos
    • Industry Opinions
    • Recent News
    • Resources
    Menu
    • Industry Opinions
    • Recent News
    • Resources
    • Analysts Coverage
    • Truth In Data
    • Podcasts
    • Industry Opinions
    • Faster Payments
    • News
    • Jobs
    • Events
    No Result
    View All Result