SOURCE: Phoenix Marketing International

Phoenix Marketing International

July 11, 2012 10:26 ET

New Phoenix Research Shows Consumers of All Income Groups Benefit From Credit Card Rewards Programs

Consumer Credit Card Spending, Revolving Balance and Annual Fee Dollars Are Driven by Rewards Cards Used by Cardholders Among All Income Levels

RHINEBECK, NY--(Marketwire - Jul 11, 2012) - New data released today shows that rewards credit cards are not just for the affluent, but are widely used at all income levels, according to a study among nearly 19,000 US cardholders conducted between January and December 2011 by Phoenix Marketing International. Cardholders charged 80% of their purchase dollars to rewards cards while the remaining 20% of dollars were charged to non-rewards accounts.

Contrary to the idea that rewards credit cards are mainly for affluent consumers, the study found that 74% of lower-income cardholders (with an annual income of $20K-$29.9K) owned a rewards credit card. Cardholders in this income group also used rewards cards more than non-rewards cards -- putting 72% of their spending dollars on their rewards accounts.

"Rewards cards not only dominated spending dollars but also revolving balance and annual fee dollars," said Greg Weed, Director of Card Performance Research at Phoenix. "Rewards cards have become such a market mainstay that two-thirds of revenue value among the lowest-income group was tied to rewards accounts."

Survey findings also indicated that higher-income cardholders contributed more than their fair share of issuer value based on interchange, finance charge and annual fee revenue. The average value of a rewards cardholder earning $150K+ per year was nearly 3 times higher than that of a rewards cardholder earning $20K-$29.9K per year -- and over 5 times higher than that of a lower-income non-rewards cardholder.

Some other highlights of the research include:

  • Overall, the average-monthly spending on a rewards account was 43% higher than the average spending on a non-rewards account. Spending averages on rewards accounts were at least 30% higher than non-rewards accounts in each income group.

  • While a larger percentage of non-rewards cardholders carried a balance (66%) than did rewards cardholders (56%), the average-monthly balance was higher on rewards cards (approximately $3,300) than on non-rewards cards (approximately $2,300).

  • 23% of cardholders reported paying an annual fee on a non-rewards card while 34% paid an annual fee on a rewards card.

  • 26% of the $20K-$29.9K income group paid a fee on a rewards card compared to 30% of the $75K-$99.9K group, 38% of the $100K-$149.9K group and 51% of the $150K+ group.

For more information, visit www.phoenixmi.com/creditcardrewards.ppt

About Phoenix Marketing International (www.phoenixmi.com)
Founded in 1999, Phoenix Marketing International is now the 30th largest market research firm in the most recent Honomichl report. Phoenix provides research, marketing and consulting services in a wide-range of practice areas, including financial services, healthcare, insurance, consumer package goods, automotive, travel & leisure industries, affluent markets, technology and media.

Contact Information

  • Greg Weed
    Director of Card Performance Research
    Email Contact
    (828) 697-9192