Credit card companies seek loyalty through rewards

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Credit card companies seek loyalty through rewards

Thursday, Mar 11, 2010
By Lance Piper

Several lenders are increasing their rewards for consumers who stay current on their credit card debt.

A recent report by CNNMoney.com pointed to reward miles-to-dollar programs offered by Citibank and JP Morgan Chase. Both companies have made these programs more attractive by increasing the number of miles earned for every dollar. Chase Freedom cardholders will now receive greater payouts on certain types of purchases.

These announcements come in the wakeof new legislation aimed at protecting consumers from high interest rates and overdraft fees.

This means lost revenue for the companies, which many are hoping to regain with new annual fees. Earning customer loyalty through reward programs is another way to make up for losses, according to the report. The more consumers use their cards, the more reward points they earn -- and the more lenders receive from merchants.

"These interchange fees come out to be about 1 or 2 percent of the transaction," the report said. "And that money goes right into the pockets of the credit card
issuer."

American Express recently announced a new kind of program aimed at rewarding cardholders for volunteering. The 2010 Member Project rewards 500 bonus points for every volunteer hour logged.

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