Cash back ranks among the most important rewards sought by consumers shopping for a new credit card, according to a study from comScore.
More than 20% of consumers reported shopping for a new credit card in the past year, with that number rising to 34% among consumers who self-identify as being optimistic about the improving economy.
The report focuses on shifts related to improving consumer perceptions of the economic environment, card features most likely to influence card shopping decisions, and the growing importance of online servicing for issuers. Results were gathered from comScore's research panel of 1 million U.S. consumers and a comScore survey of nearly 2,000 U.S. Internet users conducted in December 2010.
The most important credit card reward offerings were cash back (57% of respondents), merchant rewards (13%), flexible points (13%) and airline miles (10%).
As consumer economic sentiment improves, there has been an increase in retail and e-commerce spending along with increased credit card shopping, especially among those in the subprime sector, said Sarah Lenart, VP of financial services at Reston, Va.-based comScore.
With shopping and card applications expected to continue to increase in 2011, consumers are likely to place even greater emphasis on competitive card features and offerings as well as enticing rewards programs, she said.
"Given this, is becomes important for marketers to be aware of specific card features and rewards programs that are most important to varying consumer groups and market accordingly in order to maximize conversion," Lenart told Marketing Daily.
Low interest rates, the lack of annual fees, and rewards programs were regarded as the most important features by most cardholders, with low interest rates deemed most important by 40% of consumers. Rewards programs rank third in importance to cardholders but represent an opportunity to incentivize consumers to increase their overall use of credit as opposed to using a debit card or cash, she said.
"Card issuers always try to target specific segments with the features and benefits that would be of greatest value to them," she says. "However, as we see more consumers re-enter the card market, this becomes increasingly important."
One of the key findings within the research is that shopping rates vary substantially across specific consumer segments. For example, the study finds shopping rates of the sub-prime twice as high as the prime segment -- which is supported by actual online card application rates over the past 12 months.
"What is important to note from a marketing perspective is that these two groups place differing levels of importance on specific types of card features," Lenart says. "For example, the subprime consumer tends to place far greater emphasis on a low interest rate, whereas those in the prime segment, while also interested in competitive interest rates and no annual fees, are more likely to be attracted by lucrative rewards programs."