Amid austerity, UK consumers turn to rewards cards
By UK CreditCards.com
Rewards credit cards are seeing a surge in popularity, according to recent numbers from American Express. But cardholders may not be using them as strategically as they could be.
Britons flocking to rewards card deals
According to August 2012 research from American Express, there has been a 32% rise in reward card ownership over the past 12 months. As the UK continues along its current path of austerity, consumers are looking for ways to get the most value for their money and to earn back a little of what they spend. Almost half of those with a rewards credit card (48%) admit they are more likely to shop at stores and buy specific products that will earn them rewards.
Which rewards are the most popular? Cash-back took the top spot, with 38% of those surveyed saying they preferred it to other rewards schemes. Retail vouchers came in second, at 33%.
That's a reversal from 2011, when retail vouchers were the perk of choice. Such a shift in reward card preference suggests Britons want to maximise the amount of money left in their pockets after shopping. And the survey's numbers do seem to reflect an increased eagerness for cashing in on cash rewards -- 46% said they are more likely to redeem their points now than they were a year ago. The total proportion redeeming points at least once a year has also risen, from 78% in 2011 to 86% this year.
But many rewards are going unused
Despite the increasing popularity of rewards cards, the survey reveals that billions of pounds worth of benefits are still going untapped. Even though reward card ownership has increased since 2011, more than half of adults with such a card (52%) could be getting more value than they are at present, American Express found. By using other payment methods such as debit cards, standard credit cards and cash, cardholders are diluting their earning potential and losing as much as £3 billion in possible cash-back benefits, retail vouchers and travel discounts.
However, head of credit cards at American Express Julie Hay said in a statement that consumers are, on the whole, "embracing" ways of earning rewards from their everyday spending. Previously, Hay said, rewards card holders were more likely to use their rewards for "occasional treats." Now, however, American Express's research shows that rewards are being used to boost spending power and help diminish the cost of everyday living expenses.
Published: 10 August 2012
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