U.K. cardholders favor rewards cards

Most cardholders prefer credit cards that offer cash back or other types of rewards and incentives for using their credit cards, rather than new credit cards that offer a zero per cent rate on balance transfers, according to new findings by a Morgan Stanley Credit Card report in the U.K.

According to myfinances.co.uk and The Fair Investment Company in the U.K., The Morgan Stanley findings and figures show that about 17 per cent of credit cardholders in the U.K. carry a credit card, or multiple cards, with a zero per cent balance transfer offer. However, 21 per cent of cardholders carry at least one credit card with some type of cash back or cash rebate program.

In addition, about 15 per cent of U.K. credit card customers have credit cards with such incentives as points-based rewards that can be accumulated for redemption with specific merchants and retailers like Amazon, for example.

In fact, studies show that nowadays, cash back and other rewards programs offered by credit card companies is one of the many factors that cardholders or potential credit card consumers take into consideration when deciding which credit card they should apply for—whether it’s their first credit card, an additional credit card or a complete switchover from one credit card company to another.

Morgan Stanley Credit Card’s marketing director Patrick Muir says the trend is that cardholders and consumers are becoming more aware of and are choosing “the long-term benefits of rewards cards” as opposed to the “short-term offers” of cards with zero per cent balance transfers, for example. Rewards-based credit cards are fast becoming one the hottest and most sought-after in the market and credit card industry.

Studies and statistics show that the typical credit card user uses his or her card for everyday-life expenses, such as groceries and gasoline, regularly and enough to be able to benefit from cash back, rebates and other points-redemption rewards. Patrick Muir states that the average credit card customer redeems about 105 pounds each year in the U.K.

Besides cash back and cash rebates, consumers can choose from all sorts of different types of credit card rewards, such as air travel reward miles, gift certificates, vacations and getaways, free products and services and special exclusive discounts.

Despite the trend and the advantages and benefits of using rewards-based credit cards, the Morgan Stanley Credit Card report shows that a little more than half of all U.K. credit cardholders are still using credit cards that don’t offer any kind of rebates or cash or points-based incentives at all.

The Morgan Stanley report also found that rewards-based credit cards are most popular with older and more experienced credit card users. Cardholders in the U.K. who are older than 50 were found to be more than twice as likely (18 per cent) to have some type of rewards-based credit card than cardholders younger than 30 (only seven per cent).

Further, it is interesting to note that according to the figures, women are more likely than men to own a points-based credit card, allowing them to accumulate and redeem points at retailers; while men are more likely than women to own a cash back or cash rebate-type credit card.

Credit card companies now have the challenge in this new and competitive market to offer and promote rewards that will attract more consumers in addition to, or instead of, low-interest or zero per cent balance transfers. The challenge is that companies have to be able to offer something that not only is attractive and relevant to potential customers, but also unique and original and different from what everybody else is offering.

Did you find this article helpful?

Compare Credit Cards

Business Credit Cards