October 17, 2018
What's the benefit of having a credit card? That's easy – it allows you to buy things with money you don't currently have. (Of course, that may also be the biggest drawback of having a credit card, if you can't control your spending.)
All credit cards allow basic purchases, but what specific benefits draw you to choose one credit card over another? A recent survey and report by Market Strategies International digs into the specific features that users prefer. Their #1 choice? No annual fee.
Given that 80% of card users aren't clear about the benefits of their existing primary credit card, card issuers are better served by focusing on the top perceived benefits. The report suggests that card issuers must focus on the "must haves" and not depend on narrower benefits (listed in the survey as "tailored extras").
Eighteen different credit card benefits were ranked and categorized into tailored extras, cost and value-related benefits, or baseline items that muse be present ("has to work").
Consumers rated all three of the cost and value categories as the most important. No annual fee requirement topped the list for 72% of respondents. Cash back offers (61%) and low interest rates (60%) were also in the top tier of consumer concerns.
Credit card companies recognize the value of cash-back offers. As of late September, the average annual percentage rate (APR) for a cash-back credit card was 17.09%, barely above the 16.92% overall credit card APR average. There's not much of an APR premium to get cash-back rewards. It's easy to apply for cash-back reward cards.
The three cost and value categories were also the most likely tipping points to get a user to choose a particular card, cited by 40% to 46% of respondents.
The second tier of benefits – the "has to work" category – were identity theft monitoring (56%), 24/7 customer service access (48%), and a 0% APR promotional period (42%). Identity theft monitoring and a 0% APR promotional period were the next most likely tipping points for consumer changes, both at 34%.
The remaining twelve items were considered tailored extras, designed for a particular niche. Retailer rewards topped the list at 35%, with entry period bonus incentives at 34% and transferable points between rewards programs at 30%. Concierge services were the least interesting to consumers (13%) while other perks such as mobile apps and restaurant/travel/hotel rewards ranged from 18% to 27% in interest level.
Credit card issuers received a pretty clear message in this report. You can load up as many extra benefits as you want, but provide basic value, protection, and convenience first. Choose the remaining benefits wisely to meet your target demographic, rather than slapping on extra levels of benefits that will be ignored.
According to the Market Strategies International survey, credit card companies already have older consumers by covering the basics. Respondents aged 35-54 are intensely focused on value, while older cardholders aren't interested in features – they value loyalty and simplicity.
The 18-to-24 age group prefers technical perks (comprehensive mobile apps and tap-to-pay or similar payment systems). The 25-to-34 age group also values apps but is the most likely to be interested in the tailored extras – although the survey found they were also the least knowledgeable about these benefits.
Your preferred benefits may vary from this list, but credit cards are available to meet a wide variety of preferences. Research your options using credit card comparison websites that allow you to find the best combination of features available at your credit level – and if you don't like the options, work on raising your credit score to access better deals.
You can check your credit score and read your credit report for free within minutes by joining MoneyTips.
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