November 15, 2011

Over the past two years a significant trend has emerged among the issuers of credit cards: quarterly rewards programs that offer anywhere from double to five times cash back or points for spending in specific retail categories.  All of the top card issuers have piloted at least one of these promotions, testing spending categories such as everyday purchases that customers need to make anyway – gas, groceries and restaurant, for example — against bigger ticket purchases that are made less often, such as travel and department store purchases.

The Financial Services Group at Lightspeed Research analyzed the credit card purchase behavior in 2010 and 2011 of participants in Lightspeed Research’s Behavioral Tracking Panel to measure the impact of these promotions, both in the number of accounts being used for purchases during the promotions and on customer satisfaction.  Here are some of the findings detailed in our new 36-page report:

• Everyday purchases are more effective than bigger ticket items.  Most issuers have promoted everyday categories like grocery, gas, and restaurant.  These categories, along with home improvement purchases, have typically been the most effective in driving up the percent of accounts being used for purchases in the category during the promotion. Quarterly promotions targeting bigger-ticket purchases that are made less often — like department stores and travel — are not as consistently effective, based on Lightspeed Research tracking data.
• Some issuers have more success than others.  Bank of America, Discover, and Citi have at various times all seen a notable increase in the percent of accounts with purchases in promoted categories — most often for everyday purchases like gas, grocery, and restaurant. Despite offering some of the highest caps on potential cash-back bonus earnings, Chase was less likely than Bank of America or Discover to see increases of 5 percentage points or more in the number of accounts with purchases in a promoted category.  But like its competitors, Chase did see slight increases in the percent of accounts with purchases, particularly when promoting everyday spending categories.
• Quarterly bonus promotions increase customer satisfaction with rewards cards.  Fully two-thirds of cardholders who get offers for category-specific bonus rewards are very satisfied with their credit card, compared to just under half (48 percent) of those who don’t receive these offers.  Half of Discover customers say getting bonuses for spending in certain categories is one of the reasons they are satisfied with their cards.

To learn more about this study, contact David Gordon at or . 

Read more from Lightspeed Research’s Financial Services Group:

New Financial Reform Rules Present Marketing Challenges for Banks 

New Report Explores Consumer Attitudes Toward Credit Card Protection Products

Category:Financial Services Group, Industry News, Research Products
Posted on November 15, 2011



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