Reward Programs Remain Integral to Success of a U.S. Credit Card Market in Flux, reports Packaged Facts

ROCKVILLE, MD, August 15, 2010 (Press-News.org) While the credit card industry has suffered from significant account attrition and in some cases decreased spend per card since the recession, rewards programs continue to be integral to the market's success, according to Rewards Cards in the U.S., 3rd Edition by market research publisher Packaged Facts. Rewards remain a cornerstone of American Express and Discover, while among some of the biggest card issuers in the country, Visa- and MasterCard-branded rewards programs are either being refreshed or are being brought to market for the first time.

"The recession has brought tremendous upheaval to the industry, which has worked aggressively to counteract the financial consequences of the Credit CARD Act and the close of an era where loose credit was the norm," says Don Montuori, publisher of Packaged Facts. "We don't believe the trend toward significant account attrition has played itself out yet. But we ultimately predict that though the number of credit cards in force will continue to decline into 2011, rewards will selectively play a more important role than ever before."

The degree to which cardholders are rewarded is an important issue facing the industry. The answer will be driven more and more precisely and selectively by the return that cardholders generate for card players based on how much cardholders spend, where they use their cards, and whether they are willing to pay for better rewards. It's a quandary that is already being addressed by the marketplace, but will also continue to shape the industry in the future as reward programs become less egalitarian with larger returns in percentage terms dictated by cardholder behavior. The "losers" in the rewards game will be lower spending and higher risk cardholders, whom the market has already deemed marginal returns on investment, comments Montuori.

One countermeasure to the recession has been a move "upstream" by positioning rewards-driven programs to more affluent, more creditworthy customers who promise returns in the form of increased transactions per card and increased usage at points of sale where cash and checks still hold sway. Based on such efforts, Packaged Facts forecasts the percentage of rewards-based credit cards will grow incrementally from 76% of all general-purpose credit cards in 2009 to 77% in 2010 before reaching 82% in 2013.

Though affluent consumers are perhaps the most obvious targets of the post-recession credit card industry, younger consumers who have jobs are also attractive prospects. Millennials are currently avid debit card users, but as they enter what historically are peak credit-using years it's unknown whether they will migrate to credit cards. As a result, some credit card players are introducing products that provide a needed link to younger debit-driven consumers and position their charge cards as debit alternatives. For instance, American Express recently introduced the ZYNC Card, which functions as a pay-in-full charge card that allows cardholders to select bundles of rewards and benefits called "Packs" that are tailored to specific lifestyle interests and spending habits in categories such as music, fashion, food, travel and more.

Rewards Cards in the U.S., 3rd Edition examines the rewards-based credit card industry in the U.S. The report presents the size and growth of the market and several related key metrics within the broader credit card arena, as well as trends and factors affecting the industry. In addition, major key competitors are profiled, along with a focused analysis of consumer demographics and preferences of co-branded credit cards. The scope of the report is limited to consumer-based general-purpose credit cards that have a rewards feature. However, debit card rewards, private label rewards, and business rewards are also discussed within the context of the report. For further information, please visit: http://www.packagedfacts.com/Rewards-Cards-Edition-2716351/.

About Packaged Facts - Packaged Facts, a division of MarketResearch.com, publishes market intelligence on a wide range of consumer market topics, including consumer goods and retailing, foods and beverages, demographics, pet products and services, and financial products. Packaged Facts also offers a full range of custom research services. To learn more, visit: http://www.packagedfacts.com. Follow us on Facebook, LinkedIn and Twitter.

Please direct all inquires to:
Jenn Tekin
Packagedfacts.com
(240) 747-3015
jtekin@packagedfacts.com