What Do Consumers Want from Credit Card Rewards in 2025?

The Loyalty Model Is Breaking — and It’s Not Because Consumers Changed News that the golden age of U.S. credit card rewards may be ending has sparked a lot of debate. But the core issue isn’t disappearing perks — it’s how loyalty was designed. For decades, loyalty programs worked because they nudged people toward higher spending. - Banks benefited from fees, interest, and interchange. - Consumers got symbolic value in return. It was a system built on behavioral influence, not shared value. But today’s economic reality looks different: - Households are more cautious with spending - Debt levels are rising - Savings rates are falling - traditional loyalty no longer fits how people participate in the digital economy The model is showing its age because the assumptions beneath it no longer hold. The next evolution of loyalty won’t be based on spending—it’ll be based on participation. Not “spend more to unlock value,” but “create value through actions that matter.” That’s where the shift is happening. In an economy defined by attention, engagement, and digital behavior, the loyalty systems that win will be the ones that align value with contribution—not consumption. We’re entering a phase where loyalty stops being a reward… …and starts becoming a reflection of participation.

Consumers are rethinking their approach to holiday shopping this season, driving trends that are creating real opportunities for businesses, according to TSG and Electronic Transactions Association’s 6th annual Consumer Holiday Spending Study. Did you know? 36% of consumers would be swayed to shop at a small business if they knew that they would have their preferred payment and checkout features. Quick hits: 📱 85% percent of consumers have tried tap-to-pay technology 💳48% of consumers have experimented with digital wallets 🛒 Similar to last year, 18% plan to spend more on gifts this holiday season 🎁 View the full study to explore consumer trends: https://bit.ly/3Jo6Jnc #TSGPayments #ETA #HolidaySpending #HolidayInsights #PaymentMethods #ConsumerSpending

Nearly half of consumers try to stay loyal to small businesses (48%), no matter how they provide checkout experiences. Rural consumers tend to be more loyal to small businesses regardless of checkout features. Explore TSG and ETA’s Holiday Spending Study to see how consumer trends are unlocking real opportunities for businesses with modern payments technology. 🎁 Read the study today. #TSGPayments #ETA #HolidaySpending #HolidayInsights #ConsumerSpending

Nearly half of consumers try to stay loyal to small businesses (48%), no matter how they provide checkout experiences. Rural consumers tend to be more loyal to small businesses regardless of checkout features. Explore TSG and ETA’s Holiday Spending Study to see how consumer trends are unlocking real opportunities for business with modern payments technology. 🎁 Read the study today. #TSGPayments #ETA #HolidaySpending #HolidayInsights #ConsumerSpending

40% of shoppers won’t set a holiday budget this year, nearly double last year. This may lead to impulsive spending during the 2025 holiday season. Check out more insights on shifting consumer behavior and payment preferences in this year’s Consumer Holiday Spending Study. Explore the findings now! #TSGPayments #ETA #HolidaySpending #HolidayInsights #ConsumerSpending #PaymentPreferences

The strongest loyalty is built when rewards feel like a normal part of daily life. Most loyalty programs still keep their currency anchored to the core product like earning miles, points on room nights, card or retail spends. For big legacy brands with strong global demand this model can be very powerful and will probably stay that way. At the same time those big transactions are naturally infrequent for many members which is why more programs are adding an everyday earn layer so members can keep making progress even when they are not travelling or staying. Fuel. Groceries. Utilities. Coffee. These are not exciting categories but they create something important: frequency. Frequency → habit Habit → memory Memory → brand preference Brand preference → long term revenue Here is what everyday earn usually changes inside a program over time: More members stay active between big purchases because they keep earning on cards and everyday partners, not only on trips or large spends Points and miles move faster as balances grow with everyday transactions and members reach redemptions sooner instead of letting balances sit idle A meaningful share of the reward pool can be funded by partners such as banks, fuel or retail because they buy the currency or fund cashback style offers for their own customers Deloitte’s 2024 Consumer Loyalty Survey found that financial rewards are still what people care about most in a loyalty program. In this study, eight out of ten consumers said earning and redeeming financial rewards is the most important attribute when they look at a program. In simple terms, that means things like instant discounts, cashback or points and miles they can turn into real savings later. (Source: http://bit.ly/4oAn4V5) Everyday earn works best when it gives members more choice to earn and redeem with partners outside the core ecosystem. That keeps the currency moving and keeps a meaningful part of the reward pool funded by partners instead of only the core business. For members it means the option to earn and burn on everyday spend and the ability to build their balance faster towards a flight, room night or bigger reward. If you think about your favourite program today, which everyday categories make you feel most loyal to it? #LoyaltyProgram #Rewards #CustomerLoyalty #PointsAndMiles #LoyaltyMarketing #CX

Cashback credit cards remain the most widely preferred rewards product in the United States, but consumers and analysts say the practical value of those programs is under pressure in 2025. While surveys show strong preference for simple cash returns, rising prices, issuer tweaks to reward structures and competing loyalty models mean the dollar-for-dollar advantage of many cash-back cards is narrowing. #CreditCards #Cashback #US #Consumers https://lnkd.in/daHj8c5a

Fewer burritos, more bargains: Consumers flash holiday warning signs : High-income shoppers trade down signs that high-income shoppers are watching their budgets, too “I think sometimes there’s this idea that value only matters to low-income consumers” “But value matters to everybody, whether you’re upper income, middle income, lower income, feeling like you’re getting good value for your dollar is important” Dine CEO “We’re seeing a greater increase of higher-income guests joining us this year” adding that the jump in traffic from that cohort is offsetting the decline in visits from low-income diners “High household income cohort continues to become a larger portion of our consumer mix. It’s trade down for sure and our younger cohort also continues to grow in numbers” “We couldn’t ask for a better outcome” Younger consumers pull back Gen Z and millennials are not spending “This group is facing several headwinds, including unemployment, increased student loan repayment and slower real wage growth” “We’ve seen a moderation in average order value or basket size in categories that skew younger”

The Credit Card Wars Heat Up: How Banks Are Locking In America’s Wealthiest Shoppers Introduction: Premium Cards Go Luxe—and Strategic Credit card giants American Express and JPMorgan Chase are locked in a high-stakes battle for the wallets of America’s top spenders. With annual fees nearing $900 and perks ranging from private chef dinners to exclusive concert access, these elite cards are no longer just about points—they’re about status, loyalty, and long-term revenue streams. What began as a tool for frequent flyers has become a curated lifestyle subscription, targeting high-earning millennials, Gen Z, and ultra-wealthy consumers with precision. Key Trends and Competitive Strategies Escalating the Fee Wars Amex Platinum now charges $895/year; Chase Sapphire Reserve rose to $795. Citi returned to the premium market with the $595 Strata Elite, joining the fray. Banks justify these increases with “thousands in perks”—concierge access, airport lounges, fitness credits, fashion discounts, and luxury experiences. From Plastic to Platform Amex built a luxury ecosystem: Centurion and Platinum Lounges, Resy-powered reservations, and co-branded cards with Delta—nearly 1% of U.S. GDP flows through them. Chase responded with its own lounges, dining events, and acquisitions like Infatuation and cxLoyalty, funneling cardholders into broader banking and investment services. Why It’s More Than Just Cards The top 10% of U.S. earners now drive nearly 50% of consumer spending. These cards attract high-income users who pay in full—banks earn on interchange fees and loyalty instead of interest. “It’s a better business to be in,” says Points Guy founder Brian Kelly. Psychology of Exclusivity High fees act as a filter: If everyone has a VIP card, no one feels elite. Perks are designed for frequent, visible use: lounges, events, Instagram-worthy pop-ups, and merch access. Cardholders stay locked in due to ecosystem entrenchment: mobile wallets, auto-pay, and reward inertia. Why It Matters Credit cards have become status signifiers and data-driven lifestyle platforms. The competition isn’t just about miles anymore—it’s about owning the customer journey from spending to saving to dining to flying. As economic inequality rises, banks are doubling down on affluent users with curated experiences and exclusivity. The $895 annual fee isn’t the ceiling—it’s the cover charge for the new country club of commerce. I share daily insights with 32,000+ followers and 11,000+ professional contacts across defense, tech, and policy. If this topic resonates, I invite you to connect and continue the conversation. Keith King https://lnkd.in/gHPvUttw

“The availability of pay-later plans can be the difference between closing a sale or losing it to a competitor,” PYMNTS said. “As consumers expect financing flexibility at checkout, whether in-store or online, retailers that integrate installments and BNPL into their payment mix stand to capture incremental conversions, higher basket sizes, and stronger loyalty through the holiday cycle and beyond.” The latest PYMNTS Intelligence reveals that younger consumers (Gen Z and millennials) are contributing to a surge in pay-later usage this holiday season, viewing installment and BNPL options not as last-resort credit but as essential budgeting and cash flow management tools. This shift means that financing flexibility is now a decisive factor in where and how people shop. For merchants, simply offering a financing option is no longer enough. You must integrate a flexible, customer-first solution that meets diverse needs across all age demographics and credit profiles. Crucially, this financing needs to be upfront, available, and seamlessly integrated into your entire sales process, whether that's online checkout or in-store sales conversations. Versatile Credit helps merchants achieve this goal. Our prequalification technology guides customers through a seamless cascade of lenders, allowing shoppers to quickly and easily explore their actual offers and terms without a hard credit check. This provides the necessary visibility and flexibility for customers to budget confidently and make an informed purchase decision. We also integrate this technology directly into your workflow, launching applications via tablets, consumer mobile devices, kiosks, point-of-sale systems, and e-commerce. By providing a quick, low-anxiety way for your staff to offer and process financing, Versatile helps you drive more applications, more approvals, and ultimately, more sales. Want to learn how Versatile can help you make the most out of every opportunity by offering a great experience for all of your customers? Reach out to our team today! Read the full analysis over at PYMNTS by clicking here: https://lnkd.in/gxt87q9W #HolidayShopping #Payments #CreditStrategy #RetailStrategy #CustomerExperience #FinTech