Credit card rewards have typically fallen into two buckets: aspirational (upgrading to a first-class flight, getting a free hotel stay) or practical (earning cash back). But what if you could cover the cost of a trip to space or pay down your student loan?
Visa Inc., Mastercard Inc. and big banks are revisiting their rewards programs to cater to younger customers who want to use their cards to build wealth or get out of debt—not just rack up perks. Financial-technology, or fintech, upstarts are offering niche rewards to better compete against the established players.
Companies are also re-evaluating travel rewards programs. About 30% of rewards credit-card holders didn’t redeem rewards in 2020, according to Fintech Zoom, leading some issuers to believe there is a market for more innovative rewards. The pandemic’s effects on travel and dining have only strengthened this push. One day, intrepid spenders could redeem hundreds of thousands of card points for a ticket to orbit, according to Visa.
Here are five reward offerings you’re likely to see in the coming years, according to card industry executives and fintech firms.
Shrink Your Student Loans
With some 45 million Americans owing roughly $1.7 trillion in student-loan debt, more lenders are considering rewards programs that would allow cardholders to put cash back toward loan payments.