Pinnacle Financial Strategies, a Houston, Texas, firm that provides cash rewards programs has released studies which, it says, indicates consumers strongly favor such cash-based rewards.
The studies reaffirmed the long-standing consumer preference for cash-back rewards, with 61% of consumers asked responding that they wanted cash rewards most of all and 63% indicating a willingness to switch financial institutions to get them.
But as much as consumers want them, cash-back rewards are also the most expensive or among the most expensive kinds of rewards that card issuers can offer, Pinnacle Financial Strategies said.
But the firm argued that they are worth the additional expense given the better value proposition they offer.
“The cash-back rewards are designed to encourage the kind of banking behaviors that can both increase interchange income and improve operating efficiency, so that’s a win-win right there,” said Joe Gillen, president of Pinnacle Financial Strategies. “What’s more, customers earning cash-back rewards have a longer lifecycle and thus a greater lifetime value. “Community banks and credit unions that want to survive and thrive in retail banking need to look beyond toasters, points and miles and recognize they will get more and keep more customers with cash.”