Credit Card Rewards Demystified: Give the People What They Want

People love to get something for nothing. That‘s the magic of credit card rewards — most consumers view these benefits as a bonus for doing something they already do, like getting points for shopping at a particular store or accruing miles when using a credit card to pay for gas and groceries. The logic behind credit card rewards benefits both card issuers and cardholders. 

Card issuers want to be “top of wallet” and see increases in their  card’s usage and overall revenue. Cardholders want to score perks, discounts, and other incentives — even cash in some cases. For rewards programs to work effectively, however, both parties need to see the value. 

Yet many card issuers fail to deliver enough value. One recent survey found that during a three month period, 72% of cardholders experienced some sort of friction with their rewards cards. Nearly one in three encountered friction trying to redeem rewards, and 23% said they found the technology confusing. 

To reduce friction, card issuers must thoroughly assess user feedback, functionality and the customer journeys across both aspects of rewards: accumulation and redemption. But first, you’ve got to make sure you’re offering the right rewards. Different audiences have different needs: a mature client may be aiming for a paid family vacation where a newer customer may be more concerned with a seat upgrade. Understanding how these market segments approach the program is critical for success. For example, many Gen Z consumers want flash sales, referrals and priority access to event tickets, as opposed to the cash back programs and travel perks that have been staples of rewards programs for decades. 

Transparency is also becoming more important as organizations like the Consumer Financial Protection Bureau (CFPB) scrutinize rewards programs in response to consumer complaints about unclear policies and difficulty accessing rewards. 

Evaluating how rewards accumulate 

The first question most customers ask about rewards is “what kind of rewards are offered? Is there something I want?” Card issuers should ensure customers can easily find out what rewards options are available and how to access the rewards. Cardholders want rewards that are attainable and worth something to them personally. If a program is built where it takes too long to achieve a goal, customers may abandon the program due to frustration. 

Cardholders also want to know that rewards are accruing correctly – which can get complicated when card issuers often offer different tiers of rewards for spending at certain levels, purchases across different categories, or bonus points during pre-determined times. Card issuers should put together a plan that includes exploratory testing to make sure rewards for specific categories accrue properly before rolling out any promotions. That exploratory component can help uncover edge cases that developers haven’t considered. 

A card that promises triple rewards for groceries during a certain time period needs to ensure they credit customers for their purchases whether they’re shopping at a grocery store, warehouse club, or the local farmer’s market. Similarly a card issuer offering double points on travel or transportation-related charges may have overlooked ferry tickets, bike rentals or parking meters – but good testers know they need to seek out those types of charges.

 It’s also important to make sure that if rewards are set to expire after a certain time period, they do – and that users understand that expiration period and are notified in advance. A cardholder planning to use sky miles to book a vacation is likely to get upset if rewards unexpectedly expire and the traveler can no longer cover the tickets they wanted. Test to make sure users understand the policy governing how long rewards are available.         

Assessing the rewards redemption process

Rewards are only effective when people can use them. All too often, cardholders get frustrated trying to access the rewards they’ve gone out of their way to accumulate. Lengthy redemption processes, poor communication about reward options and inadequate guidance on how to access rewards all contribute to customer frustration. With so many different rewards cards on the market, card issuers can’t afford any friction. 

Customers also don’t want rewards to evaporate. If a set number of points are going to expire before a cardholder can put them toward something big, can they redeem them for something else? If someone doesn’t have enough points for a free flight, can they redeem credits for free checked bags, an upgraded car rental or a gift card instead? It’s important to make sure rewards are attainable at different levels so cardholders feel like they’re still getting value.  

Testing ensures that cardholders can easily redeem their rewards and that the redemption options, including statement credits, gift cards, and travel bookings work as expected. Often, rewards integrate with external systems, like airline or hotel booking portals. Testing should verify that these integrations work seamlessly and securely. As more companies move forward with superapps, this is going to become a higher priority — and a potentially greater challenge.  

It’s important to include functional testing, usability and user experience studies to uncover opportunities to make all aspects of rewards easy and intuitive. Collect feedback on where users encounter friction and things don’t work as expected so you can improve the experience — and make sure you and your cardholders both reap the rewards. 

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