Premium credit card holders are remarkably loyal to their high-fee plastic, with just 3.9% reporting they rarely or never use it, according to recent research from PYMNTS Intelligence. The finding underscores a growing divide in the credit card market, where rewards and tailored offers are increasingly important drivers of cardholder behavior.
The data comes from “How the Right Rewards and Offers Spur Credit Cardholders to Spend,” a report based on a survey of 3,066 U.S. Consumers. The study examined what motivates cardholders to choose one card over another and what fosters continued use. While entry-level rewards cards are the most common, held by 59% of cardholders, premium cards demonstrate a disproportionately high level of engagement, redemption of offers, and positive word-of-mouth referrals.
A key trend highlighted in the report is the strong correlation between annual fees and the redemption of card-linked offers. Among those paying annual fees exceeding $100, 74% redeemed at least one such offer in the past year. This contrasts sharply with holders of no-fee cards, where the redemption rate fell to 32%. Only 18% of high-fee cardholders had never utilized a card-linked offer, compared to 57% of those with no-fee cards.
The research also revealed that rewards satisfaction is a more powerful driver of referrals than cash incentives. When asked what would prompt a recommendation to friends or family, 21% of cardholders cited exceptional rewards as the primary factor, followed closely by easy-to-redeem rewards at 19%. Referral bonuses ranked lower, motivating just 9.4% of cardholders. Premium cardholders were three times more likely than those with basic, no-rewards cards to have recommended their card multiple times.
Consumer demographics also play a role in credit card usage patterns. Nearly 28% of cardholders with children hold premium cards, compared to 17% of those without. 29% of consumers living paycheck to paycheck strategically rotate between cards to manage credit limits and balances, indicating that sophisticated credit management isn’t limited to higher-income households. According to a separate PYMNTS Intelligence report from December 2023, 65% of struggling consumers revolve their credit card balances, up from 59% the previous year.
Generational differences are also apparent. Nearly half of Baby Boomers and Generation X cardholders utilize a co-branded or single-store card, while only one-third of Gen Z consumers do. Co-branded cards, which operate on standard payment networks and are widely accepted, remain popular across income levels. Single-store cards, restricted to a single retailer, are the least frequently used as a primary payment method, with just 4.5% of holders designating them as such. Approximately 10% of single-store cardholders report rarely or never using the card.
When consumers were asked about desired improvements to co-branded cards, the responses centered on tangible benefits: 59% requested better rewards or cash back, 50% wanted faster accumulation of loyalty points, and 40% sought larger discounts. App or digital wallet integration was the least popular feature, suggesting that issuers should prioritize financial value over technological enhancements.
