US travel credit card market

Goals

To understand when and why US travel credit card consumers change their providers. Also to gain general insight around the US travel credit card market, such as demographics, spending patterns, purchase periods and customer journey.

Early Findings

  • According to NerdWallet, 35% of US consumers have at least one travel credit card.
  • Consumers tend to over-estimate the worth of their rewards. This could be one of the factors causing consumers to swap cards, once they realize the true value of their rewards. The younger demographic is the most guilty of this. Baby boomers tend to be the most savvy when it comes to the real worth of their travel credit card perks.
  • The most recent research focuses on the broader category of rewards credit cards, of which travel credit cards are a sub-category.
  • Around 22% of rewards cardholders haven't redeemed any this year. Only 9 and 8%, respectively, have traded for hotel stays or airfare.
  • Data also shows that US consumers greatly prefer rewards cards with no annual fees, so the passage of a fee-free period may prompt many users to change cards.
  • 78% of consumers prefer cashback rewards, compared to 29% who prefer travel. This could also prompt users to change cards, especially if they are unhappy with the travel rewards level. This also ties in with an increased preference to redeem rewards more often, which is more limited for travel rewards.
  • Rewards credit cards are growing in popularity. 79% of US consumers stated that rewards were the most important factor in choosing a card, compared to 59% two years ago.
  • The number of consumers that have figured out how to 'game' the system to earn the most rewards is growing. By setting up a dedicated system, this prompts users to frequently change cards to maximize their earnings. This is coupled with major credit cards companies scaling back their rewards, which could lead to even more switching.

Proposed next steps:

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