However, a new study questions whether consumers are really satisfied with their co-branded travel rewards cards—or whether they are even signing up for them. The study, part of the annual Transport & Logistics Journal, found that perks like discounts on in-flight meals and room service might not be enough to keep customers coming back.
These types of rewards are “becoming common,” said the study’s authors. “Rewards need to be highly personalized with perceived exclusivity. Think flight simulator tours, suite upgrades or private dinners with renowned chefs.”
Co-branded cards are popular with consumers, but they like to switch it up
The study said that 80% of cardholders think co-branded cards are the most valuable type of credit cards, as compared to bank-issued cards. However, people are fickle. Forty percent of them switch out their primary credit card every two years, or even more frequently. So the trick for co-branded airline and hotel credit cards is to get folks to stick with them for more than two years—and hopefully even longer than that.
The reason cited for switching cards is usually better rewards. More attractive rewards were a more tempting reason to switch than a lower interest rate. One thing people like is personalized rewards. This is especially seen among younger people. Millennials, or folks ages 18-34, were the most likely to choose a credit card based on individualized card design.
Young people less swayed by co-branded cards
Millennials were less likely to carry a co-branded rewards card than other demographics. Only one-third of them reported having a co-branded travel credit card, while 50% of people their parents’ age had one.
Features popular with Millennials include digital and tech capabilities like digital wallet integration and apps that allow them to make payments, redeem rewards, and check their statements. Millennials are twice as likely as other age groups to use mobile wallet apps.
They also like to travel. The survey reported that Millennials spend a bigger portion of their income on flights and hotels than any other demographic.
This study was conducted from December 2015-January 2016 and included responses from 1300 cardholders across the country.
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