LOMBARD, Ill.—Consumers in the market for new credit cards this holiday season are most likely to apply for cards with features such as 0% introductory rates, cash-back rewards programs, ID theft protection, no annual fees and low standard interest rates, a new report reveals.
"Consumers who are in the market for a new credit card this holiday season are more likely to apply for credit cards that offer direct incentives," said Bill Handel, vice president of research, Raddon Financial Group, which authored the study. "Holiday shoppers are naturally drawn to zero interest offers and cash-back rewards, because both add instant value as spending increases during this time of the year. Financial institutions and retailers that issue cards can capitalize on this strong demand."
Among consumers that are currently in the market for a new credit card, 54% cite 0% introductory rates as a feature that would prompt them to apply for a new credit card. Annual cash-back rewards programs are cited by 50% of consumers, while 42% cite ID theft protection as a key motivator.
As expected, no annual fees and low standard interest rates continue to remain popular credit card features. Sixty four percent of those in the market today cite no annual fees as a key motivator, and 58% cite low standard interest rates.
The survey also shows that credit card rewards programs are very popular with cardholders from all age groups, as 80% of consumers with a credit card say they are currently enrolled in a rewards program, the study shows. Among cardholders, 56% are earning cash back rewards, while 40% earn redeemable rewards points, and 17% earn air miles and other travel-based rewards. For those earning rewards points, 67% prefer to redeem points on demand, and without date restrictions.
Cash-back rewards are the most popular rewards program across generations, with 66% of Traditionalists, 60% of Baby Boomers, 50% of Generation Xers and 47% of Millennials with credit cards enrolled. Rewards points are second, with 41% of Traditionalists, 39% of Baby Boomers, 43% of Generation Xers and 37% of Millennials enrolled.
Although financial services trends often highlight the strong differences in preferences among different generations, it is clear that credit card rewards programs represent a rare point of alignment, Raddon said. “Card issuers that allow family members to pool together cash-back rewards, accrued points, or air miles and other travel-based awards are more likely to gain long-term loyalty from consumers.”