[Update: Some offers mentioned below have expired. For current terms and conditions, please see card agreements. Disclosure: Cards from our partners are mentioned below.]
Are you a Groupon groupie? You may be a perfect candidate for a Groupon-branded credit card. While such a product has yet to hit the market, researchers say customers of daily deal web sites—a group of 20 million strong and growing—are a great target audience for co-branded credit cards.
Lightspeed Research found that more than one quarter (27%) of Living Social customers would be interested in a Living Social-branded credit card, while more than one-third (34%) of Groupon customers would fall for a Groupon-branded card. The research is based on an interview of more than 1,500 daily deal consumers. But, as opposed to the average “retail” or “store” branded credit card consumer who is typically a “high risk” borrower, daily deal consumers have relatively strong credit and finances. According to the survey, Groupon and LivingSocial customers:
- Are about 50% more likely to have household incomes above $75,000
- Have higher credit scores
- Make three times as many credit card purchases
- Are about twice as likely to pay their monthly credit card balances in full
Which credit card might be the first to partner up with a daily deal site? Well, research also shows that most customers have a “considerably higher incidence of American Express and Discover cards” in their wallets.
But while a “Groupon AmEx” card sounds appealing, I’d advise consumers to avoid signing up. I know we’re just being hypothetical, but should these cards come into existence they may still carry higher interest rates and fees—even though they would target a lower-risk borrower. They may still, as other co-branded credit cards do, entice us to spend more than we should in order to qualify for “rewards.” Unless you do a great deal of shopping on these daily deal sites, a co-branded credit card may not really be worth it. You’re better sticking with a card that rewards you for how you naturally spend most of your money—gas, groceries, travel, etc. Don’t be tempted.