go-Digital Blog on Digital Marketing

Are Daily Deal Credit Cards On The Way?

Source: http://www.businessinsider.com/are-daily-deal-credit-cards-on-the-way-2011-10

With the daily deal market exploding, what’s next for sites like Groupon and LivingSocial?

Groupon Goods might be the answer on some expert’s lips, but according to CardHub CEO Odysseas Papadimitriou, branded credit cards look more likely. 

That’s because credit cards are easier for shoppers to use. Unlike a coupon, they work automatically and you can always store the cards in your wallet.

Credit cards would also simplify the redemption process in that consumers could easily swipe and credit 2, 3, or even 5% cash back to their account, for example. Plus the cards present a lucrative stream of revenue that only stands to be threatened by sophisticated card companies like American Express and Visa.

The demand is there, as a survey of 1,500 consumers conducted by Lightspeed Research revealed last month. More than a quarter (27%) of LivingSocial customers said they would be interested in a branded card, while more than a third (34%) of Groupon’s customers want one too.

But would daily deal credit cards be a boon to cash-strapped consumers or just passed off as a trend among the sites’ spendthrift regulars?

“Most likely it’s going to be something high end consumers who are spenders will want,” says Papadimitriou. “They won’t be making them their primary cards across the board, but people don’t usually make store-brand cards their primary cards anyway.”

This makes sense: Lightspeed found that relative to the overall U.S. credit cardholder population, Groupon and LivingSocial regulars tend to have better credit scores, are twice as likely to pay off their monthly card balances in full, and are three times as likely to make purchases with them. What’s more, about half are earning $75,000, so they can afford it. 

So while the cards wouldn’t do much to spark the economy on the whole—or soothe the millions of Americans desperate for a deal—they might do plenty to stoke spending among the credit elite. Which is exactly what Groupon or LivingSocial want, since most affinity cards are hard up to take on risky credit holders.

If you’re in the high end, however, think twice before signing up if a card is released, says Papadimitriou. 

“As with all co-branded cards, if you’re already a loyal customer and are spending a lot of money—say more than $2,000 to $3,000 a year, then get that branded card because it will likely be useful. But if you’re not a loyal customer or a frequent spender with that company, then don’t worry about it.”

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See Also:

• Bank Of America Is Planning To Charge You A $5 Debit Card Fee
• Your Compulsive Spending Habit Isn’t Helping The Economy–Here’s How To Stop It
• GET REAL: Being Cheap Won’t Make You A Millionaire

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