Most members simply want to consoidate balances and save money with a lower rate. Cardholders also switch because of a bad service experience, a tricky billing cycle, high fine print fees or because they can’t get a better card elsewhere.


Value-added incentives like cash-back, free merchandise, discounts and point reward programs also influence card decisions. Past research shows that the key incentives include:


  • Cash-back

  • Low Balance Transfer Rate (no transfer or cash advance fees if possible)

  • Free Merchandise or Gift Cards

  • Special Member-Only Benefits or Discounts


The more recent study, Why Do Banks Reward their Customers to Use their Credit Card, showed that that consumers spend more and increase their debt when offered one percent cash-back rewards. The report also found that this relatively small reward was enough to make them act. Their average spending increased by $68 per month and debt increased by over $115 per month in the first quarter after they acquired the cash-back reward program.


The bank report also identified cardholders that do not carry debt to be more responsive to a cash-back program, and that cardholders reacted to a cash-back rewards program based on single or married demographics. For example, monthly spending on average increased by $55 and debt by $65 for the measured quarter − and by $95 and $111 respectively for married cardholders during the same period.


The best strategy to capture member credit card business is to monitor your competitors' offers, reward members for switching,  educate your members about your card features, and offer highly competitive balance transfer rates. How often you promote your program is also critical. Research shows it pays to regularly promote your card online, in your newsletter, and with email and direct mail promotions.


Sources: The Credit Card Industry Report and Why Do Banks Reward their Customers to Use their Credit Cards by Sumit Agarwal, Sujit Chakravorti, and Anna Lunn.