Credit card holders prefer everyday cash back rebates to one-time signup bonuses, according to the latest Capital One Rewards Barometer report. However, the study also reveals that existing cash back card users may need more retail incentives to avoid getting bored with their banks.
In February, researchers at BIGinsight asked more than 1,000 consumers with rewards credit cards to share their feelings about their accounts. The results illustrate how consumers' tastes shift between the gift-heavy holiday season and the vacation-planning period of late winter.
How consumers redeem credit card rewards
About half the cardholders in BIGinsight's survey redeem their rewards for cash, with most of the respondents applying their rebates directly to their credit card statements. 32 percent of cardholders trade their rewards points for gift cards, with half of those customers treating themselves to retail shopping cards and a quarter splurging on dining out.
Improving credit card rewards
BIGinsight's data shows that rewards redemption remained constant between November 2011 and February 2012. However, the percentage of consumers reporting satisfaction with their credit card rewards dropped slightly from the fall to the winter. Only one in five of the survey respondents told researchers they thought they got high value from their current rewards programs. 60 percent of the cardholders said that "special deals with retailers" would improve that value.
Though cardholders may not know it, many popular rewards credit cards already offer extra online retail savings. For instance:
- Capital One Cash: 5 percent bonus rebates at Sephora and Applebee's, 3 percent rebates at Sports Authority and Starbucks.
- Chase Freedom: 10 extra points per $1 at Kohl's and RedEnvelope, 7 extra points per $1 at Macy's.
- Discover Card: 5 percent bonus rebates at Apple Online Store, Orbitz, QVC, and Target.
Meanwhile, 45 percent of respondents suggested that they'd enjoy their credit cards more if earning rewards were simpler. Some cash back credit cards from Chase, Discover, and other lenders require cardholders to sign up for seasonal bonus discounts. Chase product managers have been testing automatic opt-in for some rewards credit cards, but have offered no timetable for a broader rollout of such a feature.