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Alternative Rewards Structures Resonate—But Simplicity Still Wins Out

(New York, NY) While many cardholders are intrigued by innovative rewards structures, traditional cash back models continue to dominate the credit card landscape. Auriemma Group’s latest issue of Cardbeat US highlights how newer approaches—like increasing rewards with spend or fixed-dollar incentives—can appeal to targeted segments, even as flat and category-based cashback offers remain the most attractive.

Traditional rewards models offer familiarity and clarity, two qualities that consistently drive acquisition. Auriemma’s research finds that 70% of credit cardholders are attracted to high cashback on specific categories, and 67% to flat-rate cashback. By contrast, less conventional options—such as receiving $20 for every $300 spent (58%) or earning more cashback as spend increases (47%)—garner moderate but notable interest.

“Simplicity remains paramount even when alternative rewards structures offer the richest value proposition,” says Jonathan O’Connor, Senior Manager of Research at Auriemma Group. “The most attractive programs are those that strike the right balance—offering rewards that are not only compelling, but are also clearly understood and easily obtained.”

Who Prefers What? Demographics Shape Rewards Appeal

Interest in newer rewards structures is higher among younger cardholders, urbanites, revolvers, and those with annual household incomes of $75,000 or more—but traditional cashback schemes still come out on top in overall preference. These groups may be drawn to novel programs, but most cardholders favor predictable reward earnings. While high cashback on specific categories is increasingly familiar and attractive, 82% say they prefer consistent flat-rate rewards across all purchases, compared to 61% who prefer higher rates on specific categories—a preference that varies widely by demographic.

Among those traditional options, demographic differences come into sharper focus. Gen Z and Millennial cardholders, those with an annual household income of $75,000 or more, and those who hold multiple credit cards are more likely to favor high cashback on specific spending categories. Meanwhile, their older and lower-income counterparts tend to prefer flat-rate cashback for its simplicity and reliability. These distinctions underscore the importance of aligning card rewards with the values and routines of each audience segment.

“Rewards structures influence not only whether a cardholder applies, but how they’ll use the card once approved,” adds O’Connor. “Understanding these usage patterns is key to building long-term engagement.”

Strategic Implications for Issuers

Though traditional rewards still outperform in overall preference, alternative models present opportunities to reach underserved or overlooked segments. Auriemma’s findings offer three key considerations for issuers evaluating future rewards designs:

1. Simplicity is Scalable: Flat-rate rewards are not only easy to market—they also drive consistent usage across categories. These cards can become top-of-wallet options due to their clarity and versatility.

2. Framing is Fundamental: Complex rewards structures can work—when communicated effectively. Issuers looking to try something new should invest in straightforward language and relatable examples that help cardholders grasp the benefit immediately.

3. Segment for Success: Younger, urban, and higher-income cardholders are more open to alternative rewards. Targeted messaging and tailored card rewards could lead to conversion.

Together, these strategies point to a clear path forward: one where simplicity and personalization work in tandem to meet the evolving expectations of credit cardholders.

“Cardholders may be open to new ideas, but they’ll ultimately stick with what feels intuitive and rewarding,” says O’Connor. “For issuers, that means crafting offers that don’t just attract but sustain long-term engagement.”

Survey Methodology

The Payments Report

This Auriemma Group study was conducted online within the US by an independent field service provider on behalf of Auriemma Group (Auriemma) in February 2025 among 1,208 adult credit cardholders. The number of interviews completed for both is sufficient to allow for statistical significance testing among sub-groups at the 95% confidence level ±5%, unless otherwise noted. The purpose of the research was not disclosed, nor did respondents know the criteria for qualifying.

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Are Stored Value Accounts a Replacement or Complement to Traditional Banking?

(New York, NY) The rapid evolution of FinTech solutions continues to reshape consumer perceptions of banking, with stored value accounts (SVAs) emerging as a potential competitor to traditional banking accounts and cards. Auriemma Group’s latest issue of The Payments Reports uncovers positive sentiments around SVAs, underscoring their role in the financial ecosystem and raising questions about their long-term viability as a banking alternative.

SVAs offered by providers like PayPal and Venmo allow consumers to preload or receive funds and use them for a variety of transactions. Auriemma’s research shows that 61% of debit cardholders view SVAs as at least complementary to traditional banking, while 31% believe these accounts could replace at least some banking functions. Notably, 8% feel SVAs could entirely replace traditional banking services.

“Stored value accounts represent an important evolution in financial tools, but the collapse of Synapse underscores the risks of fintech intermediaries not covered by the FDIC,” says Jonathan O’Connor, Senior Manager of Research at Auriemma Group. “While stored value accounts offer benefits like lower fees and faster transactions, traditional banks deliver stability, security, and trust—advantages that consumers continue to value.”

What Can Traditional Banks Do?

SVAs are causing a modest stir among cardholders. Less than three-in-ten say they would be likely to use the option if offered by a FinTech provider. However, as SVAs grow in popularity, traditional banks can differentiate themselves by doubling down on their strengths and addressing evolving consumer needs. Auriemma’s research highlights several strategies banks can use to endear themselves to current and potential customers:

  1. Building Trust: Traditional banks should emphasize their strong track record of security—including FDIC backing—and fraud prevention. Providing clear, transparent policies and educating customers about safeguards can build trust that SVAs may not yet fully inspire.
  2. Enhanced Digital Experiences: Streamlining mobile and online banking interfaces can help banks compete with the tech-first approach of FinTechs. User-friendly apps with integrated budgeting tools, instant payments, and easy account management could make a significant difference.
  3. Personalized Financial Products: Banks can leverage their broad customer data to offer tailored financial products, such as personalized savings plans or rewards programs that align with individual spending habits.
  4. Bundled Offerings: By packaging SVAs with more traditional banking services—like high-yield savings accounts, credit cards, and loans—banks can create holistic financial solutions that FinTechs may struggle to match.

Opportunities for Growth

Most of those who have used a SVA with a FinTech provider say they would likely use more of that provider’s products, if available. This highlights the possibility of expansion SVAs create for those who use them. While largely benefiting FinTechs hoping to expand into other financial services, SVAs could also be a gateway for traditional banks hoping to deepen their relationship with new and existing customers.

“Traditional banks have the advantage of deep customer relationships, established financial stability, and the trust that comes with rigorous regulatory oversight. By leaning into these strengths and innovating alongside FinTechs, banks can remain central to their customers’ financial lives,” says O’Connor. “Our research shows that the future of banking will likely blend the reliability of traditional institutions with the agility and accessibility of modern FinTech solutions, creating a dynamic ecosystem that meets a diverse set of consumer needs.”

Survey Methodology

The Payments Report

This Auriemma Group study was conducted online within the US by an independent field service provider on behalf of Auriemma Group (Auriemma) in October 2024 among 804 adult debit cardholders. The number of interviews completed for both is sufficient to allow for statistical significance testing among sub-groups at the 95% confidence level ±5%, unless otherwise noted. The purpose of the research was not disclosed, nor did respondents know the criteria for qualifying.

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Flat Cashback Rewards Cards Outshine Tiered Rewards in Cardholder Appeal

(New York, NY) Cardholders consider many factors when applying for a new credit card, with those offering no annual fees and attractive rewards structures being the most influential. Auriemma Group’s latest issue of Cardbeat US confirms that offering compelling rewards significantly impacts cardholder decisions, with a clear preference for flat cashback structures over tiered options. The simplicity and predictability of flat cashback resonates strongly with today’s applicants.

When presented with two rewards card structures of roughly equal cashback value, 48% of credit cardholders prefer the flat cashback structure, while 43% lean toward the tiered structure. Although this difference may seem modest, it widens significantly when it comes to application likelihood. 70% of cardholders say they are likely to apply for a flat cashback card, compared to 58% who would apply for a tiered rewards card, if offered by a trusted issuer. These findings highlight the competitive edge of straightforward earning structures.

Cardholders also have high expectations of their credit cards, often looking for value that goes beyond standard offerings. Auriemma’s research found that while a 2.5% flat cashback rate is not common and typically comes with various conditions, many cardholders perceive this level of return as being in line with today’s industry standards. This expectation underscores the challenge for issuers to balance generous rewards with sustainable program structures, especially as preferences vary by demographic.

For instance, issuers aiming to attract Gen Z may find that tiered rewards structures hold unique appeal. This cohort shows a slight preference for tiered rewards, suggesting they may appreciate the potential for optimized earnings that this model offers. By aligning rewards with Gen Z’s preferences, issuers may improve acquisition among younger cardholders.

“While there are reasons to gravitate toward one rewards product over another, flat rewards require little work and mental math on the part of the cardholder,” says Jaclyn Holmes, Director of Research at Auriemma Group. “This makes it the smart option for those who don’t want to give their credit cards much thought, enabling more seamless and stress-free spending experiences.”

Flat rewards structures also hold a distinct advantage in day-to-day usage, with 46% of rewards cardholders reporting that their most frequently used card offers flat cashback. This shows that ease and versatility may make flat cashback cards the popular choice across spending categories, contributing to top-of-wallet status.

Flat cashback cards provide an accessible, simple way to earn, appealing to mass consumers and driving spending across various merchants. Issuers may find that a straightforward rewards model fosters ongoing card usage, as cardholders don’t need to track changing categories to maximize their rewards.

“Flat rewards offer a win-win for both cardholders and issuers,” says Holmes. “Cardholders can enjoy the effortlessness of earning, while issuers benefit from increased acquisition and engagement. As the credit card landscape evolves, prioritizing simplicity in rewards can be a powerful differentiator.”

Survey Methodology

Cardbeat US

This Auriemma Group study was conducted online within the US by an independent field service provider on behalf of Auriemma Group (Auriemma) in September 2024 among 801 adult credit cardholders. The number of interviews completed for both is sufficient to allow for statistical significance testing among sub-groups at the 95% confidence level ±5%, unless otherwise noted. The purpose of the research was not disclosed, nor did respondents know the criteria for qualifying.

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