While many credit card issuers have been significantly boosting the value of the rewards programs they offers to consumers in recent months, largely due to increasing interest in borrowing, smaller financial institutions have lagged behind in those efforts.
Credit unions in particular have found it difficult to offer their customers credit cards that come with their own rewards programs, according to a report from the Credit Union Times. A recent study from Card Services for Credit Unions found that only about 50 percent of them nationwide are currently able to do so.
“Credit unions must recognize that cardholders are a lot savvier than they used to be and expect more from their rewards programs,” wrote Bill Lehman, FIS Global vice president for portfolio consulting, according to the site. “In fact, cardholders are much quicker than banks and credit unions to understand what they want from their financial institutions. Consumers will change financial institutions if they are presented with a rewards program that has a stronger value proposition that better matches their needs.”
In particular, Lehman recommends that credit unions who may have considered or even offered rewards programs in the past but abandoned them should begin thinking about adopting them once again, the report said. Many other programs initiated by other companies might serve as more viable blueprints than those the smaller institutions might have offered in the past.
These smaller lenders might be able to further incentivize use of these cards by linking them with other accounts, the report said. For instance, instead of using accrued rewards benefits to get cash back, merchandise, or the like, it might be more feasible for the institution to allow cardholders to redeem points for more favorable terms or rates on a line of credit such as an auto loan or mortgage.
[Credit Cards: Research and compare rewards credit cards at Credit.com.]
Many consumers are now placing a greater emphasis on the ability to earn rewards points as part and parcel in having a credit card account. The recent recession caused many to be more cautious with the way they handle these accounts, and a number of cardholders want their spending incentivized in some way.
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