Report: 40% of Consumers Prefer Credit Cards for Travel Costs — And Rewards Can Drive Spend

Four out of 10 consumers reach for their credit cards to complete payments for travel services, according to a study from PYMNTS.

The report also revealed that payment behaviors differ based on the type of purchase consumers are completing, highlighting the challenges that credit card issuers face in gaining top-of-wallet status across varying purchase types.

Credit card issuers offer incentives to encourage people to use their cards more often. And a card’s travel rewards can make or break a consumer’s decision to use a particular card when booking their next vacation.

A separate study from Collinson shows that nearly 90% “of consumers prefer travel-related rewards and benefits as a core credit card feature.” That study also found that more than 75% of people would switch to a different credit card if it offered them premium travel benefits, such as access to airport lounges, that their current cards don’t offer.

But saying you’re going to do something, such as switching to another card, is one thing, and actually doing it is another. 

The PYMNTS analysis indicated that some consumers are set in their ways when it comes to deciding which type of payment tool to use to complete certain transactions. 

“Consumer payment behavior is largely driven by entrenched habits and the nature of the purchase, with distinct patterns emerging between everyday transactions and more specialized purchases like travel,” the report’s authors said.

The PYMNTS study also analyzed debit spend, divulging that more than two-thirds of consumers in the survey said they were more likely to opt for their debit card over their credit card when completing grocery store transactions. Debit cards are also more popular than credit cards for retail and restaurant purchases.

In fact, travel is the only category in which consumers are more inclined to use credit cards rather than debit cards, according to the PYMNTS report.

Consumers turn to debit cards over other payment options in part because they provide a more straightforward method of tracking payments and helping people stay within their budgets, according to the report.

While convenience is a primary factor for debit card use, rewards and cash back programs entice consumers to make payments with credit cards.

Credit card issuers may not be happy to learn that some consumers prefer to use a debit card instead of a credit card for some types of transactions. But the good news for credit card issuers is that travel spending is often more expensive than everyday types of purchases.

The average ticket for domestic air travel in the U.S. costs approximately $400.

The average domestic airline fare in the U.S. is nearly $400. And for people who buy airline tickets for their entire families, the total cost of those flights can add up quickly.

Credit card issuers gain revenue via interchange when people use their cards to transact. Interchange fees amount to a fraction of a transaction’s total cost, so bigger-ticket purchases can lead to more revenue for issuers.

Credit card issuers looking to boost profits should review their rewards programs, particularly those related to travel, to ensure they are not falling behind competitor offerings. That practice can help credit cards retain their status as consumers’ preferred payment method for travel services.