Answering 5 questions while offering travel rewards
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Answering 5 questions while offering travel rewards

Ai Editorial

19th August, 2022 

A study has reiterated the significance of travel-related rewards in the plans of credit card holders, who mostly keep an eye on that holiday or a trip that can be propelled by their loyalty currency. Yet it isn’t happening too often and it is reflected in how consumers are ending up with unused credit card rewards.

LendingTree’s recent survey of around 1,300 credit cardholders in the U. S. found that majority of rewards credit cardholders (almost 70%) have unused cash back rewards, points or miles. The majority (49%) have unused cash back rewards, while 13% have unused airline miles and 11% unused fuel points, according to LendingTree’s survey of around 1,300 credit cardholders.

A vacation or any other travel-related plan can’t be ignored while evaluating the issue of rewards credit cardholders not redeeming rewards that are available to them. It is important to understand the link between how much these cardholders earn, their spending pattern, miles they earn and eventually what story unused rewards depicts.

The survey mentioned that consumers “who earn less are less likely to have unused rewards than those who earn more”. More than 6 in 10 (63%) who make less than $35,000 a year have unused rewards, versus 74% of cardholders who make $100,000 or more. The primary difference between these two groups is airline miles. Almost a quarter (23%) of six-figure earners have airline miles saved. By comparison, just 4% of those making less than $35,000 have airline miles stashed away.

The top three reasons why rewards credit cardholders are sitting on unused rewards are:

  • 63% enjoy saving rewards until they reach a certain amount.
  • 22% don’t have enough rewards, points or miles to pay for travel yet (e.g., flight, hotel stay).
  • 11% have rewards for travel but don’t have any upcoming trips.

 

In another recent study, Arrivia stated that there are currently significant disconnects between consumer awareness of travel rewards (and their value) and the existing loyalty programs offered by most companies.

What can be done for “that trip”?

For helping those who are “waiting” what can be done by cards/ loyalty programs to get them closer to their plan, some questions:

  • How many consumers are availing the option of funding own reward redemptions (loyalty currency plus cash)? How many availing the option of paying in instalments along with points/ miles? Looking at the unused rewards, why not support those who are keen on that big-ticket travel expenditure?
  • What other creative yet feasible ways can companies go for to help cardholders put their dreams within reach?
  • What kind of travel rewards work best for credit card issuers?
  • Is exclusive pricing attractive?
  • How to decode generational differences?

 

By Ritesh Gupta, Ai Events

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