TREND HIGHLIGHTS IN U.S. CUSTOMER CREDIT CARD TRAVEL POINT REDEMPTION (LOYALTY POINTS USAGE TRENDS)

TREND HIGHLIGHTS IN U.S. CUSTOMER CREDIT CARD TRAVEL POINT REDEMPTION (LOYALTY POINTS USAGE TRENDS)

Credit card companies have recognized the need to make changes to their rewards programs based on the current economic crisis due to COVID-19, and its impact on the travel industry- allowing consumers to redeem rewards points for other purchases. Many consumers are opting to redeem travel points for other needs to cover food service, streaming services, and mobile phone purchases. Trend highlights in U.S. consumer credit card travel point redemption, over a 3 to 5 year period, show 82% of travelers (2019) enjoyed credit card travel loyalty programs, while men are 87% more likely than women to have a rewards credit card (80%).

Statistics: U.S. Usage Trends for Travel Loyalty Point Redemption (past 3 to 5-years)

  • Capital One ranked best overall choice for its credit card rewards program for the fifth consecutive year, earning an average score of 91% for redeemable value.
  • Between 2014-2019, the best rewards credit card yielded up to $1,243 more than the worst rewards card over the first two years for travel points- 21% more value than merchandise.
  • In 2019, the greatest loyalty pain point was impatience: 54% of respondents believed it took too long to earn a reward- 60% of travel customers wanted instant rewards, 59% wanted the ability to choose rewards, and 34% cared about personalized rewards.
  • 82% of travelers (2019) enjoyed credit card travel loyalty programs, 81% valued the rewards received when redeemed, and 76% of travelers understood the value received from air miles and hotel points.
  • 79% of travelers mentioned credit card loyalty programs as a main reason for choosing specific airlines or hotel brands, while 72% enjoyed perks beyond discounts (2019).
  • 25% of U.S. travelers in the 15-24 age bracket (2019) were members of a loyalty program, compared to 43% in the 65+ age bracket.
  • A 2018 survey indicates, men are 87% more likely than women to have a rewards credit card (80%), while 60% of men and 56% of women will let their rewards build and rollover as long as possible.
  • In 2018, 71% of consumers who are members of loyalty programs say membership is a meaningful part of their relationships with brands, 52.3% of customers will join a loyalty or VIP program, more than 70% of Millennial and Pre-millennials were members of loyalty programs versus less than 20% among Baby Boomers, 82% of Gen X was active in at least one loyalty program, 77% of Gen X loyalty program members redeemed rewards at least once a quarter, and 35% of those born in 1945 or earlier do not participate in any loyalty program. About two-thirds of Gen Z’s were reluctant to join loyalty programs for a variety of reasons, with 40% saying the programs require too many purchases to earn rewards or to redeem points.
  • Only 66% of U.S. consumers understood what sorts of rewards they were getting, while 36% understood their supplementary benefits- issuers’ explanation of card benefits was the lowest ranked feature for consumer satisfaction, with benefits and services, together with credit card terms, coming in as the lowest-rated factors.
  • The 2018 TSYS U.S. Consumer Payment Study indicates 79% of U.S. card holders named rewards as the most attractive feature of their preferred card, up from 68% in 2017 and 59% in 2016 (33% redeemed rewards for travel). Card users’ favorite rewards programs for 2016-2018 ranked travel at 34%, 29%, and 33%.
  • In Q2(2020), travel miles/points bonuses increased by almost 10%- when compared to Q1(2020), their value decreased by 5.7% due to corona virus pandemic.

Statistics: U.S. Usage Trends for Travel Loyalty Point Redemption (3 to 5-year Projections)

  • While consumers appreciate ‘points for purchases’, 75% of consumers want to be rewarded for engagements beyond purchases. 64% of all consumers indicated that traditional points for rewards programs remains appealing, however, Millennial (55%) and Gen-X (38%) prefer brands that offer creative and unexpected rewards.
  • 72% of Gen Z and Gen X, 68% of Millennial, 56% of Baby Boomers and 42% of those born in 1945 or earlier can be persuaded to choose one brand over another due to the presence of a credit card loyalty program, especially for travel.
  • The average U.S. business credit card interest rate is 19.71%. For travel rewards cards, that rate is 20.56%.
  • Top rewards programs for credit cards offer at least 1% cash back or one point or mile per dollar spent- many travel programs offered through credit cards offer 2-5 points per dollar spent on airfare, hotel stays or ride-sharing services.
  • The following are the top picks for the best travel credit cards programs for 2020: airline miles and a large bonus and Premium travel rewards- Chase Sapphire Reserve, luxury perks- American Express Platinum Card and Business travelers- Ink Business Preferred Credit Card.
  • Travel cards with redemption perks have become one of the most competitive categories, while some features are standard across the board: no foreign transaction fees, travel credits and upgrade programs.
  • Trends highlight more credit card companies will offer more creative travel rewards benefits– A fee credit for Global Entry/TSA PreCheck, Priority Pass airport lounge access, and a sign-up bonus.
  • The corona virus pandemic has had an impact on travel and spending. As a result, many travel credit card issuers are offering new or enhanced perks to reflect how cardholders are spending their money now.
  • Optimism concerning future value of travel credit card rewards indicates they will become more valuable when the virus passes and travel restrictions are lifted in the U.S.
  • Many travel rewards credit card benefits are currently unusable during the corona virus pandemic, so card issuers have rolled out new perks tailored to life in quarantine- Capital One is letting select cardholders redeem miles to cover food delivery, streaming service, and mobile phone purchases.

Research Strategy

We begin our research by locating industry statics for the past 3-5 years relevant to trends in credit card travel rewards programs, as well as predictions for redemption during and after the corona virus pandemic. Data points were gathered from credible source such as Business Insider, Investopedia, credit card sources, AP News, and Miles Credit Card Lanscape Report. The research also focuses on new offerings by companies to encourage consumer to redeem their travel points.

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