Survey: Millions stay loyal to a single card forever
Rewards are consumers’ favorite credit card perk, but many don’t shop around
Statistics enthusiast focused on data-driven content
A surprising 25 million consumers have been in a long-term relationship with their favorite credit card for at least 10 years, according to a new CreditCards.com survey. Another 20 million have never changed their preferred card.
The national telephone survey of U.S. adult credit card holders commissioned by CreditCards.com found 56 percent of consumers hold at least one major credit card, and that cardholders favor rewards and cash back over any other perk.
However, a significant minority rely primarily on one card for many years -- not the best strategy in an era of big sign-up bonuses, according to experts.
"Not looking at new loyalty programs or periodically taking advantage of other card offers means you might be missing out on valuable credit benefits," explained Jeff Berry, editor-in-chief for Colloquy, a consumer loyalty research organization.
Here's what the study revealed about consumer credit card habits:
- Reward points/cash back are the card benefits consumers love most, according to 35 percent of respondents. Widespread card acceptance (23 percent) and low interest rates (21 percent) are also preferred card features.
- Senior citizens are the most loyal cardholders: 31 percent have been using the same card most often for at least a decade and another 20 percent have never switched from their primary card.
- Forty-four percent of respondents would be worried about hurting their credit score if they were to cancel a credit card, but that concern ranks especially high for young adults: 57 percent of 18- to 29-year olds said they wouldn't cancel a card out of fear of harming their scores.
The survey of 1,002 U.S. consumers, including 639 credit card holders, was conducted by landline and cellphone Feb. 4-7, 2016. See survey methodology.
card changers versus long-term holders
The survey revealed a split between cardholders: those who frequently change up the credit card they use most often and those who remain loyal to one particular card for many years.
Twenty-four percent of consumers said they switched their favorite card in the past one to three years. Cardholders between the ages of 18 and 29 were the most likely group (43 percent) to report switching cards.
While young adults work on building up their credit portfolio, it makes sense that many would add a new card to their portfolio every couple of years or so to boost their credit scores while also taking advantage of rewards card bonus sign-up offers. They are "feeling out the card products," according to Berry.
"It's not surprising that millennials are doing that more often, largely because they are cherry-picking, looking for the best offer and trying to maximize their returns," he said.
However, 19 percent of all consumers said they've favored the same card for at least 10 years and another 15 percent report never changing their primary card.
"I think certainly they are playing it safe because there is comfort in understanding," Berry said. "When people stick to cards for a long period of time, they get comfortable with it and understand what the card does for them. They just 'get it.'"
Concerns about financial and credit stability may also play a role in long-term card use.
"To take on more credit and go through that whole process -- maybe even canceling a card -- that probably doesn't feel like a winning proposition to everyone, especially if they don't understand the value proposition of a new card," Berry explained. "I think this might be especially true if you've spent 10 years with the same card."
It's possible extremely loyal seniors are just happy with the card they use most often, too.
"There is no downside to holding onto a credit card for an extended period of time – as long as you pay off your balance in full each month," said Ken Chaplin, TransUnion's senior vice president.
a card switching sweet spot
Meanwhile, many middle-aged adults fall into, well, the middle, actively changing cards every several years or so. According to the survey, 19 percent of those age 30-49 and 18 percent of those age 50-64 changed their most-used card in the past four to five years.
In many cases, credit card decisions are made by life stages, according to Berry. For example, people in their early 30s might be child-free and able to travel often; they may opt for travel cards. Fast forward a few years when children come into the picture, and a cash-back card offering a percentage back on grocery store or pharmacy expenses may make more sense than racking up travel rewards points.
Responding to different needs is what often drives a card switch, so evaluating the cards in your wallet when your lifestyle changes, or every four to five years otherwise, is a good idea.
"I think that's probably the right time frame," Berry said. "If you are earning points with your favorite card, you've probably earned enough over that time period to redeem a flight" and then it may be time to move on.
should play the field
Reward points and cash back perks are by far the favorite feature of their cards, as 35 percent of all cardholders reported. However, long-term card loyalty doesn't always reap the greatest rewards.
Regularly reviewing new card offers might reveal opportunities to earn more -- or better -- rewards just for opening and using the new card.
"Most people don't shop around to a degree that is most beneficial for them," Berry said. "Some sort of periodic evaluation of what you are getting back from your current card compared to another is probably a good best practice."
Credit industry research firm Credit Suisse predicted 2016 will be a particularly good year for credit card rewards as issuers return extra income earned from growing card balances back to consumers.
"Rewards programs are ultimately a must for cardholders," said Robert Palmer, host of Saving Thousands, a financial advice radio network. "For the most part, we can't avoid using credit cards, but we can absolutely use credit cards to our advantage."
Cardholders just need to spend within their means, pay balances off in full every month and understand the program they've signed up for.
"The right rewards cards creates a unique opportunity for consumers to actually beat the bank," Palmer explained. "If a consumer can stay disciplined enough to always pay the balance in full before the grace period, the consumer wins. Financial institutions are counting on consumers to fail and carry balances at high interest rates."
Even if card rewards program carry no appeal to you, periodically reviewing card offers for programs bearing fewer fees and lower interest rates is still a good idea. Watch for online and mailed card offers that best fit your individual financial situation.
Consumers protective of credit scores
Those hanging on to their cards for extended periods often are concerned with maintaining a good credit score.
According to the survey, 44 percent of cardholders say they wouldn't cancel a credit card in the future in fear of hurting their credit scores. Consumers between the ages of 18-29 are especially protective of their credit score, with 57 percent of survey respondents in that age group saying they would avoid canceling a card to protect their credit scores.
|WHAT WOULD STOP CONSUMERS
FROM CANCELING A CREDIT CARD?
|Asked what would prevent them from canceling a credit card, survey respondents named these obstacles:|
This is good news, according to Kevin Gallegos, vice president of Phoenix operations for the Freedom Financial Network.
"That indicates people understand a bit more about the impact of keeping a long-standing credit account open," he said.
Canceling a credit card might be especially hard on a young adult's credit portfolio, as their account history lengths are typically shorter and they hold fewer accounts.
If the card represents a large portion of available credit, the closing may have a negative impact on a consumer's score, Chaplin explained. "Length of credit history is also a factor in your credit score, so it's usually a good idea to keep your oldest card open to demonstrate a history of responsible spending."
For these reasons, it's best for anyone -- young and old -- to just put an undesired card aside instead of closing it (once it's paid off, of course) and then open another more appropriate card.
"Put it in a safe deposit box," Gallegos said. "Some people even freeze a card in a bowl of water if they don't want to be tempted to use it."
If better rewards are what you're seeking, even just starting a card cancellation process conversation with a representative could be beneficial if you're no longer satisfied with your once-favorite card.
"If you go to through the act of canceling the card, you are also opening an opportunity for more added value," Berry said "The card issuer might give you more points for hanging around or a bonus for keeping the card open if you send them the message that the card isn't competitive with other offers you've seen on the market."
But if you're intent on applying for a new card, it's best to refrain from canceling any old cards until you are approved for a new one. Canceling a card will ding your credit score by reducing your available credit lines. You want the highest credit score possible when applying for any type of credit product or loan, so hold on to what you have until you have that shiny new plastic in hand.
CreditCards.com commissioned Princeton Survey Research Associates International to obtain telephone interviews with 639 credit card holders living in the continental United States. Interviews were conducted by landline and cellphone in English and Spanish by Princeton Data Source from Feb. 4-7, 2016. Statistical results are weighted to correct known demographic discrepancies. The margin of sampling error is plus or minus 4.6 percentage points.
- Joint bank accounts can help couples curb frivolous spending – A new study suggests pooling your money into a joint account with your significant other can nudge both of you into spending more responsibly ...
- Poll: No end in sight for 2 out of 3 U.S. adults with debt – Many Americans don't know when or if they'll ever get out of debt, according to a new CreditCards.com poll. That includes 25 percent of people who have debt and think they'll die before paying it off ...
- Credit card debt weighs heavy on Southern states – A new analysis by CreditCards.com found New Mexico carries the heftiest debt load in the nation. And Southern states took nine of the top 10 spots for states most burdened by debt ...