Consumers routinely search for the best price or deal when making a long-term financial commitment – from automobiles to cable companies to phone carriers. They don’t, however, tend to comparison shop once they have committed to a credit card.
A report by creditcards.com shows that some 25 million credit card holders have held the same card for at least a decade, and another 20 million have never switched to a different creditor. This, despite the emergence of rewards programs that offer consumers robust benefits.
Among the most popular perks offered through reward programs are cash-back options and bonus rewards. When offered, cash-back and other reward options can put extra money in the pocket of cardholders. Cash-back benefits can be applied as a credit on a future statement or deposited electronically in the customer’s bank account.
Some financial institutions offer bonus opportunities such as providing customers with as much as triple rewards during certain times throughout the year, when they spend a particular amount on their card or when they charge specified items such as groceries or gas.
“How consumers choose credit cards or a credit card company is very different today than it was 5-10 years ago. In the past, most consumers chose a card based on rate and annual fee, today we look for rewards and conveniences,” said Kim Adams, Sales Manager with Arvest Bank. “It’s a good idea to know what your card offers vs the competition.”
More than half of consumers who did switch to a new credit card made the change because of a better rewards program, according to a creditcards.com survey from 2015. Adams said another deciding factor consumers consider before selecting a credit card is a strong sense of security and trust in the financial institution with which the card is affiliated.
A rare and competitive offering among a handful of institutions is a rewards program that touches every level of credit cards. From a classic card to the platinum level, a rewards program could be in place, though the rewards may vary.
In addition, card issuers are becoming increasingly competitive by eliminating various fees, such as annual rewards program fees and balance transfer fees, and increasing the amount of control cardholders have at their fingertips.
“Many cards offer the ability to make changes via your mobile device in real time to avoid calling in to speak to a representative,” Adams said. “Customers often need to inform their card of travel plans, wanting to redeem reward points or requesting a spending limit increase and can do so without making a phone call.”
One factor that will always get the attention of cardholders is interest rates. An individual’s improved credit score could mean they are eligible for a lower rate on their credit card. That provides another option for saving money and another reason to evaluate and compare programs.
The Federal Reserve has made multiple increases in interest rates this year, and another could come this fall or winter. With that change, every percentage point and every rewards option could affect consumers’ wallets in one way or another.
The bottom line for consumers is that, with the emerging new benefits programs offered by credit card issuers amidst a rising rate environment, comparison shopping for the best credit card for their particular needs is becoming more important than ever.
About the author: Calvin Gwartney is a Marketing Specialist for Arvest Bank. Named by Forbes magazine as one of “America’s Best Large Employers” for 2017, Arvest Bank operates more than 260 bank branches in Arkansas, Oklahoma, Missouri and Kansas through a group of 16 locally managed banks, each with its own board and management team.