Co-Branded and Affinity Cards in the U.S., 5th Edition

Executive Summary

Report Scope

Market size and forecast

Market factors

Number of co-branded credit card programs

Retail cards most prevalent, followed by airline and hotel cards

Visa tops relationship share

Co-branded airline credit cards

Co-branded hotel credit cards

Airline guest, frequent flyer, and hotel guest analysis

The power of frequent flyers and frequent flyer programs

Tracking hotel visitor affluence

Co-branded credit card case studies

Amazon.com Rewards Visa Card

BuyPower MasterCard

Carnival World MasterCard

Citi Hilton HHonors Visa Signature Card

Ralphs rewards plus Visa Card

Ritz-Carlton Rewards Credit Card

Sam’s Club MasterCard

Southwest Airlines Rapid Rewards Plus & Rapid Rewards Premiere Visa Cards

Virgin Atlantic World Elite MasterCard

Walmart MasterCard

Wyndham Rewards Visa Card

Card association co-branded strategies

American Express

MasterCard

Visa

Co-branded and Affinity Credit Card Issuer Strategies

Alliance Data Systems

Bank of America

Barclays

Capital One

Citibank

J.P. Morgan Chase

Synchrony Financial Services

U.S. Bank

Wells Fargo

General-purpose credit card consumer usage trends

Co-branded and affinity credit card consumer usage trends

Trends over time: credit cards with affiliations/rewards

Affiliation/rewards credit card usage, by demographic

Affiliation/rewards credit card usage, by household investments

Co-branded/affinity card usage

Co-brand/affinity credit card application influencers

Chapter 2: Market Size and Forecast

Co-branded credit card market size

Table 2-1: U.S. Co-Branded Credit Card Purchase Value by Operating Network, 2014

Market factors

Number of co-branded credit card programs

Rewards an expected part of the bargain

Partnership industry segments

Retail cards most prevalent, followed by airline and hotel cards

Table 2-2: U.S. Co-Branded Credit Card Programs by Issuer & Card Type, 2015

Table 2-3: U.S. Co-Branded Credit Card Programs: Issuer by Partner Segment, 2015

Visa tops relationship share

Table 2-4: U.S. Co-Branded Credit Card Programs by Issuer & Operating Network, 2015

Co-branded airline credit cards

MasterCard gains; American Express loses

Table 2-5: U.S. Airline Co-Branded Credit Card Programs: By Airline, Operating Network and Issuer,2015

Co-branded hotel credit cards

Red Roof Inn launch suggests co-branded has not given up on Middle America

Table 2-6: U.S. Hotel Co-Branded Credit Cards: By Hotel, Network/Association, Rewards & Issuer, 2015

Chapter 3: Airline Guest, Frequent Flyer, and Hotel Guest Analysis

Why care about airline co-brands?

The power of frequent flyers

Table 3-1: Domestic Round Trips in the Past Year: Any Travel, Business Travel, Personal/Vacation Travel by Travel Frequency and HH Income, 2015

Table 3-2: International Round Trips in the Past Year: Any Travel, Business Travel, Personal/Vacation Travel by Travel Frequency and HH Income, 2015

The power of frequent flyer programs: income

The power of frequent flyer programs: loyalty

Table 3-3: Frequent Flyer Members by Airline Program and HH Income, 2015

Table 3-4: Frequent Flyer Member Last Round Trip by Airline Program and Airline Flown: Business/Personal and Business-Only, 2015

Tracking hotel visitor affluence

Table 3-5: Domestic Hotel Stay in Past 12 Months: By Hotel Brand, 2015

Chapter 4: Co-Branded Credit Card Case Studies

Amazon.com Rewards Visa Card

Table 4-1: Adults 18+ Who Ordered from Amazon in Past 3 Months, 2015

Table 4-2: Amazon.com Rewards Visa Signature Card Incentives, Rewards and Other Features, 2015

Mobile app

To compete against 5% Back Card

BuyPower MasterCard/GM Extended Family Card

Differentiation between the cards

Differentiation, among its competitors

Table 4-3: GM’s BuyPower MasterCard, Rewards and Other Features, 2015

Table 4-4: GM’s Extended Family Card, Rewards and Other Features, 2015

Mobile and online

Name change

Carnival World MasterCard

Table 4-5: The Carnival Cruise Traveler, 2015

Points translation

Rewards longevity

Differentiation, among its competitors

Table 4-6: Cruise Travel Frequency in Past Three Years, 2015

Graph 4-1: The Carnival Cruise Traveler: Amount Spent on Las Cruise, 2015

Table 4-7: The Carnival World MasterCard, Rewards and Other Features, 2015

Mobile and online

Citi Hilton HHonors Visa Signature Card

Table 4-8: Hilton Use in Past 12 Months: Any, Personal and Business, 2015

Rewards differentiator

Even more benefits

The fine print

Table 4-9: Citi Hilton HHonors Visa Signature Card Incentives, Rewards and Other Features, 2015

Mobile and online

Citi Hilton HHonors Reserve Card

Give me the Gold!

So what’s it mean to a consumer?

Some fine print

Table 4-10: Citi Hilton HHonors Reserve Card Incentives, Rewards and Other Features, 2015

The Hilton HHonors Reward Program

Ralphs rewards plus Visa Card

Rewards differentiation: private label loyalty

Table 4-11: Kroger Supermarket Chain Brands Shopped in Past 4 Weeks: Six Major Brands, 2015

Even more benefits

The website

An interesting benefit targeting families

Table 4-12: Ralphs rewards plus Visa Card Incentives, Rewards and Other Features, 2015

Mobile and online

Ritz-Carlton Rewards Credit Card

Table 4-13: Ritz-Carlton Domestic Travel Guest in Past 12 Months, 2015

The Black Card is marketing in action

The only downside

Automatic Gold Elite Status

Competition from IHG and Fairmont Visa

Table 4-14: Ritz-Carlton Rewards Credit Card Incentives, Rewards and Other Features, 2015

Ritz-Carlton Rewards Program

Ritz-Carlton Rewards Program Elite Levels

Table 4-15: Ritz-Carlton Rewards Credit Card Tiers & Features, 2015

The fine print: member activity

Mobile and online

Sam’s Club MasterCard

Table 4-16: Sam’s Club vs. Costco: Visit Frequency in Past Month, 2015

Rewards limitations

Table 4-17: Sam’s Club MasterCard, Rewards and Other Features, 2015

Mobile and online

Southwest Airlines Rapid Rewards Plus & Rapid Rewards Premiere Visa Cards

Differing tiers, differing rewards

Differentiation

Transparency suffers, but a nice surprise awaits

Companion Pass Status: travel for two, anyone?

Table 4-18: Southwest Airlines Rapid Rewards Plus & Rapid Rewards Premiere Visa Cards, Tiers and Features, 2015

Rapid Rewards

Not all is perfect

Points for eating and shopping, too

A-List Status

Mobile and online

Virgin Atlantic World Elite MasterCard

Other benefits

What’s the big deal?

Foreign transaction fee

Table 4-19: Virgin Atlantic World Elite Black MasterCard, Rewards and Other Features, 2015

Table 4-20: Virgin Atlantic World Elite White MasterCard, Rewards and Other Features, 2015

Flying Club Rewards

Mobile and online

Walmart MasterCard

Table 4-21: Shopped at Walmart in past 4 Weeks, Any and 3+ Times, 2015

Rewards and benefits

Table 4-22: Walmart MasterCard Incentives, Rewards and Other Features, 2015

Mobile and online

Wyndham Rewards Visa Card

Table 4-23: Wyndham Hotels Domestic Travel Guest in Past 12 Months, 2015

Table 4-24: Wyndham Rewards Visa Card Incentives, Rewards and Other Features, 2015

Table 4-25: Wyndham Rewards Visa Card With No Annual Fee, Rewards and Other Features, 2015

Mobile and online

Wyndham Rewards

Chapter 5: Card Association Co-branded Strategies

American Express

Value proposition

Challenges

Operating segments

Special services and programs abound

Rewards cards and loyalty programs are the name of the game

Membership Rewards

Rewards expense and discount rate trends

Table 5-1: American Express: Cardholder Rewards, Cardholder Rewards & Marketing Expense vs. Billed Business: 2012-2014

Own-branded credit cards

Movement to category-based rewards tiers

SimplyCash gets a reboot

Business Gold follows

Multi-tender loyalty foray

Addressing the airport lounge issue

Co-branded credit cards

Co-branded moves

Co-branded card portfolio provides more card options

Oh, no, not Costco!

Table 5-2: American Express Consumer and Small Business Own-Brand & Co-Branded Credit Card Programs, 2015

Delta signed—for a price

Third-party co-branded relationships

Table 5-3: American Express U.S. Third-Party Co-Branded Credit Card Programs, 2015

Co-branded spend

Table 5-4: American Express U.S. Card Services Billed Business and Co-branded Billed Business, 2014

MasterCard

Back in the co-branded game

Table 5-5: U.S. General-Purpose Credit Card/Charge Card Purchase Value by Operating Network: Actual and Indexed Growth, 2007-2014

Recent traction and momentum

More than 4 in 10 co-branded partners go with MasterCard

Table 5-6: MasterCard U.S. Co-Branded Credit Card Programs, by Card Segment, 2015

Visa

Tiered consumer credit platform

Market share leader

Catching up with the affluent

Table 5-7: General-Purpose Credit Card Usage by Association/Networks: Percent Change by HH Income, 2009 vs. 2015

Costco helps Visa take affluent strategy a step further

Pushing ubiquitous acceptance

Co-branded moves

Visa leads co-branded purchase value and partnerships

Table 5-8: Visa U.S. Co-Branded Credit Card Programs by Card Segment, 2015

Chapter 6: Co-branded and Affinity Credit Card Issuer Strategies

Alliance Data Systems

Competitive positioning

Co-branded moves

Table 6-1: Alliance Data Systems: Co-Branded Credit Card Partners, 2015

Performance analysis

Robust volume, receivables and account growth

Table 6-2: Alliance Data Systems Private Label/Co-branded Loans, Purchase Value & Accounts,2009-2014

Co-branded share

Table 6-3: Alliance Data Systems, Purchase Value & Loans Outstanding by Major Retail Partner, 2014

Bank of America

Own-brand strategy: casting a broad, stable net

Rewards for all but a handful of cards

And Preferred Rewards for all! Well, almost all . . .

Co-branded and affinity a strong suit

Strong continuity on the co-branded side

Streamlining the affinity side

Table 6-4: Bank of America Consumer and Business Own-Brand & Co-Branded Credit Card Programs,2015

Table 6-5: Bank of America Consumer and Business Affinity Credit Card Programs, 2015

Barclays

Co-branded credit card growth and trends

Co-branded card portfolio

Buying, then building the portfolio

Losses add up

But so do wins

Table 6-6: Barclay’s Consumer and Business Own-Brand & Co-Branded Credit Card Programs, 2015

US Airways, L.L. Bean and Upromise are largest accounts

Table 6-7: Barclays U.S. Co-branded Accounts, by Account Number & Total Receivables, 2015

Performance analysis

Table 6-8: Barclays Bank Delaware: Credit card Loans Outstanding, 2011-2014

Table 6-9: Barclays Bank Delaware: Financial Overview, 2014

Capital One Financial

Competitive positioning

Own-brand moves

Co-branded moves

Co-branded acquisitions and sales

HSBC deal adds co-branded and private label power

GM, Saks and AFL-CIO co-branded accounts stick

Going forward

Table 6-10: Capital One Consumer and Business Own-Brand & Co-Branded Credit Card Programs, 2015

Performance analysis

Table 6-11: Capital One Financial Corporation: U.S. Credit Card Purchase Value & Loans Outstanding,2011-2014

Citibank

Leaner, meaner and ready to expand again

Portfolio streamlining

Global synergy

Rewards strategy

Own-brand moves

ThankYou program

Simplicity Card

Double Cash

Citi Private Pass

Citi Price Rewind

Co-branded moves

Private label revitalization helps co-branded cards

American Airlines: the biggest airline co-branded program?

Costco win: looking past rate of return to the demographics

Best Buy co-branded and private label

Macy’s

Sears

Citi Hilton HHonors Reserve Visa Signature

Table 6-12: Citibank Consumer and Business Own-Brand & Co-Branded Credit Card Programs, 2015

Co-branded share

Figure 6-13: Citibank North American Card Purchase Value, Loans Outstanding and Accounts: Retail Services and Citi-Branded, 2010-2014

J.P. Morgan Chase

Card, transaction and new account leadership

Value proposition

Using the recession to create a healthier portfolio

And leaving recession card blues behind

Targeting the affluent

Developing and enhancing own-branded card lines and rewards

Harnessing digital

Co-brand: Focus on core portfolio

Table 6-14: J.P. Morgan Chase Consumer, Business and Government Own-Brand & Co-Branded Credit Card Programs, 2015

A heavy brand partner skew to affluence

Table 6-15: Chase Co-branded Card Hotel Brands: Domestic Travel Guest in Past 12 Months, by Brand & Demographic, 2015

Table 6-16: Frequent Flyer Enrollment: Southwest Airlines and United Airlines, by Demographic, 2015

Synchrony Financial Services

Partner movement and segment growth

Wins, renewals and losses

Growth strategies: grow private label share of partner sales & grow partners

Co-branded moves

Table 6-17: Synchrony Financial Services: Major Private Label/Co-branded Retail Partners, 2015

The co-branded angle

Amazon, QVC and Belk

Major co-branded accounts

PayPal

Key private label and co-branded credit card retailer accounts

Table 6-18: Synchrony Financial Credit Card Trust Loan Receivables & Account Share, 2015

Big-box retail formats lead Retail Card receivables

Table 6-19: Synchrony Financial Private Label Credit Card Receivables by Retail Partner, Q1 2015

Performance analysis

Positive loan growth and account growth trends

Purchase volume gains suggest success with retail partners

Accounts getting bigger?

Table 6-20: Synchrony Financial Retail Card Purchase Value, Receivables & Partners, 2011-2014 & H1 2014-2015

Table 6-21: Synchrony Financial Services Synchrony Financial Purchase Value, Loan Receivables, Accounts & Revenue, by Segment, 2011-2014

Table 6-22: Synchrony Financial Services Purchase Value, Loan Receivables, Accounts & Revenue, by Segment, H1 2014 vs. H1 2015

U.S. Bank

Own-branded credit card trends

Targeting a broad audience, with an affluent skew

FlexPerks taps American Express

But downstream products maintained

Co-branded strength and stability

Airline and retail emphasis

Co-branded moves

MasterCard sneaks another into Visa henhouse

Table 6-23: U.S. Bank Consumer and Business Own-Brand & Co-Branded Credit Card Programs/Cards,2015

Wells Fargo

Own-brand and co-branded moves

Table 6-24: Wells Fargo: Consumer Credit Card Metrics, 2014

Table 6-25: Wells Fargo Own-Brand & Co-branded Cards, 2015

Chapter 7: General-Purpose Credit Card Consumer Usage Trends

Introduction

Credit card usage trends over time

Percentage of credit card users on the upswing

General-purpose card usage growth lags department store card usage growth

Graph 7-1: All Credit Card, General-Purpose Credit Card & Department Store Credit Card Usage Penetration, 2006-2015

General-purpose credit card usage trends: 2006 to 2015

Pre-recession usage peak remains a long way off

Only American Express increases usage penetration

Graph 7-2: General-Purpose Credit Card Usage Penetration by Card Association/Network, 2006-2015

MasterCard turnaround underway?

Table 7-1: General-Purpose Credit Card Usage Penetration by Card Association: Percent Change,2006-2015

General-purpose credit card usage frequency trends: 2006-2015

Graph 7-3: Credit Card Usage Frequency Share: General-Purpose Credit Cards, 2006-2015

General-purpose credit cards in wallet: trends over time

Graph 7-4: General-Purpose Credit Cards: User Share by Number of Cards in Wallet, 2006-2015

Credit card usage by HH income

American Express maintains dominance among higher-income card users

Graph 7-5: General-Purpose Credit Card Association/Networks: User Share by HH Income, 2015

But American Express’ grip on the affluent is slipping

Table 7-2: General-Purpose Credit Card Use Among $150K+ Consumers: By Association/Networks,2009-2015

Table 7-3: General-Purpose Credit Card Use by Association/Networks: Percent Change in Usage, by HH Income, 2009-2015

American Express

Table 7-4: American Express Credit Card: User Share by HH Income, 2015

Discover

Table 7-5: Discover Credit Card: User Share by HH Income, 2015

MasterCard

Table 7-6: MasterCard Credit Card: User Share by HH Income, 2015

Visa

Table 7-7: Visa Credit Card: User Share by HH Income, 2015

Chapter 8: Co-branded and Affinity Credit Card Consumer Usage Trends

Rewards/affiliation credit card usage trends: 2011 to 2015

Introduction and explanation

Co-brand/rewards credit card usage outstrips general-purpose credit cards

Cash back takes the lead

Table 8-1: Rewards/Affiliation Credit Card Usage: All Adults, by Co-brand/Rewards Type, 2011-2015

Table 8-2: Rewards/Affiliation Credit Card Usage: General-Purpose Credit Card Users by Co-brand/Rewards Type, 2011-2015

American Express rewards/affiliation credit card usage trending

Table 8-3: American Express Rewards/Affiliation Credit Card Usage by Affiliation/Reward Type,2011-2015

Discover rewards/affiliation credit card usage trending

Table 8-4: Discover Rewards/Affiliation Credit Card Usage by Affiliation/Reward Type, 2011-2015

MasterCard rewards/affiliation credit card usage trending

Riding the cash back wave?

Table 8-5: MasterCard Rewards/Affiliation Credit Card Usage by Affiliation/Reward Type, 2011-2015

Visa co-brand/rewards credit card usage trending

Co-brand/rewards usage share gains across the board

Table 8-6: Visa Rewards/Affiliation Credit Card Usage by Affiliation/Reward Type, 2011-2015

Rewards/affiliation credit card usage, by demographic

By HH income: affluent dominate hotel and airline

Graph 8-1: General-Purpose & Rewards/Affiliation Credit Card Usage Share: By Rewards/Affiliation & HH Income, 2015

By generation and gender: generation shift in play?

Table 8-7: General-Purpose & Rewards/Affiliation Credit Card Usage: By Rewards/Affiliation & Generation by Gender, 2015

Airline card usage and usage share

Graph 8-2: Credit Cards with Airline Affiliation, by Association/Networks: Usage and Usage Share by HH Income, 2015

Cash back card usage and usage share

Graph 8-3: Credit Cards with Cash Back Rewards by Association/Networks: Usage and Usage Share by HH Income, 2015

Rewards/affiliation credit card usage, by household investments

Table 8-8: Credit Card Usage by Card Association & Rewards/Affiliation Type: Among Investors with $100K+ in Assets, by Asset Type, 2015

Co-branded/affinity credit card usage

Introduction and context

More than 5 in 10 general-purpose credit card users have co-brand/affinity card

Graph 8-4: General-Purpose and Co-Brand/Affinity Credit Card Usage & Active Usage, 2015

Visa co-brand/affinity usage penetration leads other card associations

Graph 8-5: General-Purpose & Co-Brand/Affinity Credit Card Usage & Active Usage: By Card Association, 2015

Graph 8-6: General-Purpose and Co-Brand/Affinity Credit Indexed Card Usage & Active Usage: By Card Association, 2015

But co-brand/affinity card penetration by association is a close call

Graph 8-7: General-Purpose and Co-Brand/Affinity Credit Indexed Usage: Relative Indexing by Card Association, 2015

Proprietary survey results affirm co-brand/affinity demographic skew

Table 8-9: General-Purpose and Co-Brand/Affinity Credit Card Usage Penetration: By Demographic,2015

MasterCard and Visa co-branded users skew younger, with Visa drawing younger affluent

Table 8-10: American Express & MasterCard & Visa Co-Brand/Affinity Usage & Active Usage: By Demographic, 2015

15 co-brand/affinity card types: usage & usage in past 30 days

Co-branded penetration more than three times higher than affinity

Retail cards most prevalent

Affinity-based card types play minor but important role

Graph 8-8: Co-branded and Affinity Credit Card Usage & Active Usage: By 15 Card Types, 2015

Retail and airline cards promise stronger engagement?

Affinity cards have lower engagement?

Table 8-11: Co-branded and Affinity Credit Card Usage Ratio: By 15 Card Types, 2015

Co-branded cards attract higher incomes; affinity cards attract more males

Graph 8-9: Co-branded vs. Affinity Credit Card Usage Share: By Gender, Age and HH Income, 2015

Chapter 9: Co-Brand/Affinity Credit Card Application Influencers

Co-brand/affinity card signup influencers

Introduction

The big picture

No annual fee and rewards help drive sign-up decision

Mobile app not so much

Graph 9-1: Co-Branded Credit Card Features: Sign-Up Influencers, 2015

The Details

Ways to earn extra points/rewards: demographic analysis

Table 9-1: Ways to Earn Extra Points/Rewards: Co-branded Card Sign-Up Influencers by Demographic, 2015

Rewards program features: demographic analysis

Table 9-2: Rewards Program Features: Co-branded Card Sign-Up Influencers by Demographic, 2015

Types of discounts: demographic analysis

Table 9-3: Types of Discounts: Co-branded Card Sign-Up Influencers by Demographic, 2015

Types of special perks: demographic analysis

Table 9-4: Types of Special Perks & Services: Co-branded Card Sign-Up Influencers by Demographic,2015

Types of travel benefits: demographic analysis

Table 9-5: Types of Travel Benefits: Co-branded Card Sign-Up Influencers by Demographic, 2015

Appendix

Methodology

Consumer survey methodology

Explanations

Report table interpretation

Terms and definitions

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