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In light of the Durbin Amendment, many personal finance experts and bloggers (myself included) have predicted a drop in the in the quality and value of credit card rewards programs in 2011. Many are predicting subtle differences we may not notice immediately, like points not going as far, the loss of cashback options, and companies pushing retail partner rewards like gift cards and merchandise over cash back and statement credits. We may also see new caps on points, or fewer signing bonuses, or even expiration dates on rewards becoming commonplace.
But so far only one of these — an emphasis on promoting retail partner programs — has come to pass, and it’s not exactly a bad thing.
Here are the 2011 credit card reward trends we’ve been seeing, along with some insider information from representatives at top credit card companies. This is by no means a comprehensive list, just an overview from some of the top rewards card providers.
American Express has been providing special experiences and services to its customers for years; we can look for that to continue and for other companies to raise the bar on making their customers feel special.
This year, Discover expanded its rewards program to include exclusive cardmember experiences, starting with Discover Orange Bowl tickets and exclusive activities surrounding the game.
Chase also offers a host of experiences in its Ultimate Rewards program, from tickets to sold-out sporting events to passes to the Sundance Film Festival. “Our focus in 2011,” says Rob Rosenblatt, Chase general manager of loyalty and innovation, “is on making rewards faster, easier, and providing more things that are special, unique and hard to get.”
The “faster and easier” part of rewards redemption is covered with smartphones and the Web. “The Internet has become the preferred way to redeem rewards,” observes Rosenblatt.
Money management no longer takes place only at people’s desks, and credit card companies recognize this, too. Look for a number of mobile apps and downloadable software applications to make earning, managing and redeeming rewards even easier. One example is Chase’s GiftShelf, which lets people purchase gift cards with a Chase credit card or Chase rewards points through their iPhone, iPod Touch or iPad and then use the device to send and/or redeem the gift card.
American Express recently launched the InSite application, downloadable software that provides all sorts of useful information about good deals on the Web from American Express partners. The platform shows results from more than 250 brands, including Barnes & Noble, Crate & Barrel and more. American Express Director of Public Affairs Brad Minor explains that the new shopping tool, “Delivers Membership Rewards® bonus points, discounts, free shipping and other special offers exclusively to American Express Cardmembers as they shop online.
Citing “simplicity” as one of the three focuses for American Express Rewards programs in the coming year, Minor adds, “We want our rewards to be relevant when and where our Cardmembers shop.” A new partnership with Amazon lets cardmembers can redeem their Rewards points right at check-out.
In addition to adding more retail partners to thier programs, credit card companies will look for ways to provide incentives to customers redeeming rewards points for gift cards and merchandise. Discover is already doing this; Cardmembers can increase the value of their rewards when they redeem for partner gift cards. “We’ve also recently added hundreds of merchandise options that come with free shipping and, in some cases, no tax,” says Discover spokesperson Laura Gingiss.
Gingiss points out that cash back remains the most popular way Discover card holders redeem their rewards. “We believe cardmember preference will continue to be heavily weighted towards cash — as opposed to points — and we intend to give our cardmembers even more opportunities to earn Cashback Bonus,” she says.
All three representatives admitted that customers love cash rewards and said there are no current plans to change these offerings. Most credit card companies now provide the option to redeem your cash rewards in the form of a statement credit, direct deposit to your checking account, or a regular check. Some companies, like Amex and Bank of America, also let cardholders redeem cash back for a mortgage payment. We can expect it to remain quick, easy and lucrative to turn our credit card rewards into cash — at least for now.