The Future of Rewards: Key Trends Shaping Credit Card Programs in the Next Five Years

Jun 18, 2024

Across industries, there aren’t many sectors more established in customer loyalty programs than finance. Credit card programs have been around since the 1980s, and over the past four decades, thousands of different card offerings have entered (and exited) the market.

The evolution of credit card rewards has been dramatic. It began with the introduction of cash back, then progressed to points for rewards programs. There was even a time before the Durbin Amendment when debit card reward programs were extremely popular. With new Durbin and Junk Fee legislation on the horizon, card programs are poised to change once again.

With this in mind, below are the key trends that Kobie believes will shape card programs in the next five years.


Relationship Banking
Customer acquisition is expensive and challenging. Through relationship banking, financial institutions aim to incentivize their existing cardholders to use other products within their ecosystem. This increases the value and longevity of their customer relationships. In other words, they are building enterprise value, regardless of the specific product used.

Issuers can leverage several strategies to employ a relationship banking strategy throughout the entire loyalty lifecycle (acquisition, spend, and redemption). These strategies include rewarding beyond just transactions, offering limited-time promotions, and highlighting the total value proposition of the program. The most successful issuers will utilize a combination of these in-market strategies. Financial institutions that neglect a relationship banking strategy are missing an opportunity to optimize their loyalty programs to drive enterprise value and mitigate potential revenue loss from future legislation.


Issuers are increasingly allowing cardholders to personalize the loyalty experience by tailoring the reward structure to their evolving needs and wants. Some programs allow cardholders to manually update their bonus spend categories, while others do it automatically based on spending habits. Both methods empower cardholders, which can foster long-term loyalty.

By providing a card with a flexible value proposition, issuers eliminate a potential reason for cardholders to switch to another program. Issuers will need to strategically choose which merchant category codes (MCCs) are part of the rewards structure due to interchange costs. However, card programs that allow co-creation on the earn structure while providing an exceptional redemption experience will be best positioned to create strong top-of-wallet behavior from their cardholders.


Point Ubiquity
Cards that aspire to be top-of-wallet need to integrate their programs seamlessly into cardholders’ lives. Cardholders want the ability to use their points as cash, as well as purchase, gift, and exchange points between people and programs. In fact, Kobie’s 2024 Loyalty Study indicates that between 53% and 84% of respondents expect their program to offer these capabilities. By removing barriers to points redemption, issuers empower cardholders to extract even more value from the program.


CPP Flexibility
To combat rising rewards costs and upcoming legislation, card programs will need to move away from a standard cost-per-point (CPP) value across all redemption options. Certain redemption options will need to be more favorable for issuers. The most desirable or convenient redemption options will likely be the ones cardholders are more accepting of paying extra for, and these options will also drive the most savings for the issuer.

It’s important to note that CPP flexibility should not be limited to the redemption type level, but rather extend to the individual redemption item level. For example, a purchase eraser and a statement credit are both cash back options, but they don’t necessarily need to have the same CPP. The same principle applies to an Amazon gift card versus a Texas Roadhouse gift card.


Contact Kobie today to get connected with an SME and learn more.

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Drew Slater is a Director of Strategic Consulting at Kobie Marketing. Drew focuses on ensuring clients receive exceptional results that they want and keeps his team on track towards those goals every step of the way. His commitment to being an integral member of the consulting team helps support the demands and results of each client. His specialties include strategic direction, message development, and communication planning for corporate level, cross-department, and departmental initiatives.