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MasterCard’s Update on the State of the U.S. Consumer: Credit Card Rewards Remain Crucial

Nitin Sumangali |

One of the key messages emerging as MasterCard prepares to release the fourth Global Insights study of the credit/debit dynamic among U.S. consumers is the continued importance of rewards. “Continued importance”:  this analysis has offered the opportunity to take a historical view of changes in attitudes and behaviors among U.S. consumers as regards their spending, borrowing, and choice of tender.

As the economy (slowly) improves consumers have for their part shown an improvement in their own confidence managing household spending. At the same time consumers evince another attitude that goes a long way toward accounting for credit card spending’s rise—the continuing attraction rewards exercise.

Just as cash spending gave way to debit spending as consumers discovered the benefits of electronic payments, rewards continue to prove a driver of credit card spend. According to Global Insights’ research, fully 54 percent of consumers say they use their credit card because it offers rewards, up 9 percentage points from 2008. This increase is particularly notable given that MasterCard’s analysis of industry data indicating that the average credit card transaction amount fell by 2.2 percent—from $94.9 in 2008 to $92.9 in 2012; this decline suggests that consumers are using credit cards for smaller purchases, with rewards offering a key incentive.

Rewards remain key for credit card spend and, in this regard, issuers have a number of weapons in their arsenal that are part of the core relationship. Cash-back rewards are the most popular form of rewards with the affluent, where 49 percent have cash-back rewards, compared with airline rewards at 25 percent. Designing rewards that offer cash back to both consumer segments can be profitable, especially as more consumers feel confident in their ability to meet their goals and take on certain levels of debt.

Stay tuned for the new version of the annual study that will provide a more expanded look at the U.S. consumer situation.

Topics: Credit, Debit/Prepaid, Economic Outlook

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