The Capital One Rewards Barometer revealed that while 33% of rewards card holders reported this May they would use rewards for summer vacations, only 21% redeemed. According to the barometer, a quarterly survey among American consumers that focuses on how they accumulate and redeem credit card rewards, the top barrier preventing customers from using their rewards…
The Capital One Rewards Barometer revealed that while 33% of rewards card holders reported this May they would use rewards for summer vacations, only 21% redeemed. According to the barometer, a quarterly survey among American consumers that focuses on how they accumulate and redeem credit card rewards, the top barrier preventing customers from using their rewards points for travel was not having enough rewards to book the trip they wanted (43%). Blackout dates and lack of availability also prevented cardholders from redeeming their rewards for travel.
“Card holders should understand that sometimes it can be difficult to use the rewards they’ve earned with some programs,” said Amy Lenander, Vice President of Rewards Programs at Capital One. “At Capital One, we design our rewards programs to offer great value, flexibility and ease of use. For example, our travel rewards customers can redeem their miles for any travel purchase, even if it’s booked at the last minute.”
Understanding extra fees
When card holders redeem rewards for travel, their trip is not always as “free” as expected since they are sometimes charged extra for airline taxes, fuel surcharges, and booking fees when they redeem. According to the barometer, 37% of cardholders who used rewards for travel had to pay fees this summer when they redeemed their rewards. That said, more than one-third of respondents surveyed are not sure if they are charged a fee or additional expense when using rewards to book travel. Not only are card holders often unaware of the extra fees charged for rewards redemption, but more than half of the respondents (52%) are not sure if they are charged foreign transaction fees on their credit card purchases while traveling abroad.
“Take the time to understand your rewards programs. Before you plan your next trip, find out if you need to pay anything out-of-pocket to redeem rewards, and if you can cover extra fees, like checked baggage fees, using your credit card rewards,” added Lenander.
Early holiday planning
Many card holders are already thinking about saving up their rewards for holiday purchases. According to the Rewards Barometer, 32% of rewards card holders will consider redeeming rewards toward holiday gifts, and 13% already have plans to do so. Of those with plans to redeem for holiday gifts, more than half chose gift cards (58%) over merchandise (18%).
Rewards trends
Additional trends stemming from the Rewards Barometer this quarter include:
- Since the launch of the Rewards Barometer in the spring of 2011, “free money” remains the top motivation for consumers to earn and redeem rewards at 59 percent.
- Cash remains the top rewards redemption option at 42%, followed by domestic airline tickets (31%) and gift cards (28%).
- Redemption rates remain consistent in 2012, with an average of 44% redeeming in the prior three months.
- More than 90% of rewards card holders continue to be satisfied, very satisfied or completely satisfied with their rewards credit card.
Rewards tips
Capital One offers the following tips for rewards card holders to get more from their rewards program:
- Look at the fine print: Many rewards credit cards may have similar offerings; however, look at the fine print to catch important differences like additional fees charged when redeeming, reward expiration dates, and blackout dates.
- Account for extra fees: Additional charges such as fuel surcharges, baggage fees and foreign transaction fees can add up, so take those costs into consideration when budgeting for your travel. Also investigate whether your credit card rewards program allows you to use rewards to cover these costs.
- Redeem on the go: Looks for cards that make it easy for you to redeem your rewards, like allowing you to erase expenses straight from your mobile device during or after your vacation.
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
