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Rewards credit cards: What do people really want?

by Peter Andrew

Consumer gripes about rewards credit cards are increasing, according to recent research from Capital One. The Capital One Rewards Barometer is a continuing quarterly survey that looks at consumer attitudes and practices concerning rewards cards issued by a wide range of American credit card companies.

Rewards credit cards and customer satisfaction

The barometer's latest results came from a February poll. Back in November 2011, when consumers were asked whether they ranked their ability to earn rewards quickly as "very good" or "excellent," 52 percent said yes. That fell to 47 percent in February. Similarly, 55 percent rated in those top two categories the value of the rewards they received in November, but only half did in February.

All this came as a bit of a surprise to your blogger, who seems to spend a worryingly high proportion of his life reporting enhancements to credit card rewards programs. So what are consumers' main beefs?

Beefs with rewards credit cards

Here are four of the key results of Capital One's most recent survey:

    • Only 21 percent of respondents believed they were getting a high value for their rewards.

    • Almost 60 percent thought they'd do better if their credit card companies organized more special deals with retailers.

    • Forty percent were unhappy with rewards that were subject to expiration dates.

    • Some 45 percent complained that their rewards programs were too complicated.

    The economics of rewards credit cards

    You can see what people were complaining about in that last point. When it comes to rewards credit cards, there are plenty of complicated programs around. In a press release, Capital One expanded on this particular gripe:

    While a high earn rate is an important rewards feature, complexities around earning these rewards, including special categories which have higher rewards earn rates such as gas or groceries, or spend minimums in order to receive rewards, are impacting the overall experiences of rewards credit card holders.

    You might almost think that some programs are designed to stop people redeeming the maximum rewards. Well, duh! Of course that's the case. If everyone cashed in every point, mile, or cent of cash back they'd theoretically earned, the programs wouldn't be economical, and many credit card companies would have to dramatically scale back the headline offers that they rely on to persuade you to sign up.

    Low interest credit cards an option

    This may not apply to all rewards credit cards, and you need to be sure that you've read and understood the terms and conditions before you apply your John Hancock to any dotted line. But, if you choose to subscribe to a rewards program that requires you to jump through hoops, you ought to be willing to invest the time and effort required to do that. Otherwise, you might be better off finding a more simple -- but superficially less generous -- program.

    Of course, it's usually a bad idea to carry balances forward on rewards plastic, simply because the credit card interest rates that apply to these tend to be higher than those on non-rewards cards. As has frequently been said in this corner of cyberspace, charge to your rewards cards those purchases that you plan to pay for within a billing cycle or two. If you're likely to take longer than that to pay down the balance, use one of your low interest credit cards.

    Published 04/11/12 (Modified 01/13/14)


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