Credit card companies are notorious for rewarding spending with sky miles and vacations. They have established both high loyalty and profit with their customers, as the more the consumer spends, the nicer the trip they are able to go on. However, vacationing seems to be a thing of the past considering the ongoing pandemic. Credit card companies are struggling to find incentives to offer their customers in exchange for big spending and to justify high annual fees.
Since the beginning of the pandemic, credit card company satisfaction has fallen significantly. In fact, according to a study by ValuePenguin, 40% of those surveyed have canceled their rewards cards all together. Of those who still have accounts open, half of them were considering canceling theirs soon.
In response, card companies are offering rewards that better accommodate customers’ current needs. For example, some card companies are offering rewards based on money spent on groceries or food delivery services. Others are offering points for money spent on streaming services, computers, and gas. Banks, such as Chase, are offering cash-back for certain spending and lowering their annual fees for their cards until the end of the year. Despite their efforts, consumer spending is still low.
Consumer spending ignites the American economy. Although credit card companies are trying to tailor their programs to help customers, unemployment is still high. This could have an effect on the overall frugality of the average American consumer. Time will tell if this is a long term trend; however, it is best to assume it will last at least until coronavirus is under control in the U.S.
Have you found yourself using your credit card less during the pandemic? Let us know down in the comments.
This article originally published on GREY Journal.