In a Q&A, Capital One’s rewards vice president Amy Lenander discloses it will be a busy summer season, and what the future holds for rewards
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As 2014 summer vacation plans come into sharper focus, more Americans are turning to credit card reward programs to shoulder some of the cost of their travels.
That’s just one of the conclusions of a recent survey of consumers who have reward credit cards. The survey, commissioned by Capital One, found that 48 percent of reward cardholders plan to redeem rewards for summer travel this year, up from 30 percent last year.
The survey also revealed that consumers generally are satisfied with rewards programs, almost half try to redeem awards less than a month before they travel and a big majority prefer cash over other kinds of awards.
Capital One, vice president
of rewards services
In looking at the future of rewards. Amy Lenander of Capital One says consumers want simplicity and access to their points via mobile devices, and that sign-up bonuses will remain at an elevated level.
For insight into rewards trends and tips for travelers, we turned to Amy Lenander, Capital One’s vice president of reward programs. While touting the virtues of Capital One’s cards, she also shared tips on how to save money with whatever cards you might have.
A seasoned traveler, Lenander has visited every continent except Antarctica — and she’s contemplating how to get there, too. Remarks have been edited for length and clarity.
Q: If I’m getting a new rewards card, what are some of the things I should be looking out for?
You certainly want to look at how you’re going to earn rewards on that card. Some consumers really love the idea of earning a trip somewhere, or some other special treats that they might get with their rewards. In those cases, an airline card might be more appropriate.
In other cases, customers just want a pure, simple cash back card, because that’s the thing they give the most value to.
The big question is going to be: How many rewards are you going to be able to earn with this card, given the way that you spend?
The other piece that’s important to pay attention to when you get a new card is, how easy is it going to be to use those rewards? Are you going to be able to get the things that you care about?
Q: How can rewards help people who are traveling this summer?
In some cases, that would be by redeeming for the travel itself. With Capital One cards, we have a feature called the Purchase Eraser, which allows you to redeem for the cost of any travel-related item that you purchase with your card. Even if its just a subway ride or a short taxi ride that’s part of your vacation, even if you don’t have a lot of rewards built up, you probably have enough to pay for that taxi ride.
Customers often forget that even if they don’t have enough miles for a trip, they can often use their rewards for something like a gift card. You can usually get a gift card for something that will help you offset the cost of your travel.
Also, rewards credit cards usually come with extra features that can help you when you travel. The biggest one to pay attention to is foreign-transaction fees. In our Capital One Rewards Barometer survey, more than half of people with rewards cards (56 percent) said they were unaware that card issuers sometimes charge these fees. It’s good to check, if you’re traveling internationally.
If you pay attention to the features of your card, you’ll often be able to use your credit card to cover your rental car insurance and not have to pay for your insurance when booking the rental car. There’s also often travel accident insurance, and fraud liability features as well — features that would be able to save consumers a bit of extra money.
Q: What does the recent survey data tell you about what consumers want from credit card rewards programs?
One of the big trends we’re seeing is that consumers are looking for more simplicity and flexibility, both as they earn rewards and as they actually use them. Consumers are realizing that it’s not just about that headline earn rate, but that they should also be paying attention to whether they can actually use their rewards.
In our survey, when we asked people what would make their card better, 52 percent said earning the same amount of rewards on everything they buy, every day.
Q: Why is that? In the credit card industry, there are a lot of cards where it’s double points for this, triple points for that, double points if you use your card certain Fridays at restaurants, that sort of thing. Why the interest in simplicity?
People are busy. They want to live their lives, and they want to get rewarded for that, but they don’t actually want to have to change their behavior just so they can earn rewards on their credit card.
|SUMMER 2014: LOTS OF TRAVEL,|
LOTS OF REWARDS SPENDING
|More of us plan to travel on vacation this summer …|
|… and more of us plan to redeem rewards points during summer travel.|
|Source: Capital One Rewards Barometer, a survey of 1,000 U.S. adults with rewards cards.|
More and more, consumers are becoming aware of the things that sometimes can prevent them from using rewards. Blackout dates, the value of miles or points changing over time or expiring — these are all things that get in the way of customers using their rewards.
Q: Do programs with more complicated reward structures offer a better value? Some programs are quite complicated. I understand the value of simplicity, but do people who opt for more simple and straightforward rewards cards receive less of a value than people who have mastered the details of more complex ones?
It depends on the person. In most cases, it is possible to have both simplicity and value. That’s what we offer with our Capital One cards — getting two miles per dollar with every purchase, every day with our Venture card, or 1-1/2 percent cash back on everything with the Quicksilver card. We’re trying to deliver really great value on everything you purchase. You can do better than that for any given purchase, but the spend that most customers do is not just going to be in one product category.
If you want to spend a lot of time juggling different credit card products, you can piece together several different programs. If you pay really close attention to which card you use in each circumstance, you can earn more rewards than Capital One cards offer, but that’s going to take a lot of time and effort.
The value of what most people get from that is small and might not even exceed what they could get by having a relatively high earn rate on every purchase, every day.
Q: With more people getting into credit card rewards, what are some of the misconceptions that people have? What do they sometimes fail to understand?
The big one is that not all travel has the same value.
In our Rewards Barometer survey, 11 percent of consumers with rewards cards believe all travel rewards gave the same value, which is not true at all. The biggest tip is just to pay attention to that.
Q: Where do you see credit card rewards evolving to in the next few years? Where is it all going?
People are getting busier and busier, and there’s so much information coming at them, there is going to be more of a premium on things getting simpler over time, so that customers can easily understand what is going on and they can access their rewards.
Every time the airlines add a new fee, it’s an opportunity for a credit card to credit that for customers as an extra perk.
The other big trend is that everything is moving more digital and mobile. Expect reward loyalty programs to go that way, too.
We’ll start to see more and more ways to use your rewards digitally. When you’re surfing the Internet or using your mobile phone, you’ll be able to interact with rewards more and easily access them.
As it becomes more and more transparent what rewards are worth and how you can use them, that will feed the trend toward simplicity.
Q: Where do you see sign-up bonuses going?
They are still incredibly prevalent in the industry, and I don’t see them going away any time soon. I think they’ll continue to be at pretty high levels.
Q: For consumers, will the rewards be better and richer? Will they be scaled back? Or will they be pretty much the same?
I don’t see a trend toward decreasing rewards anytime soon. One of the things happening in the market is that rewards points and miles and cash-back are becoming commodities in the market. As banks and credit card companies seek to differentiate themselves and build loyalty with their customers, they’re going to look to other features in addition to points and miles and cash-back.
If I was forecasting what trends would happen, I would think we’d see more features and benefits being tied to credit cards, in addition to the miles and points.
Q: Such as?
In the travel space, we’ll see more travel-related benefits, such as accident insurance and rental insurance and fraud liability — that sort of thing. But even crediting checked-bag fees — every time the airlines add a new fee, it’s an opportunity for a credit card to credit that for customers as an extra perk.