Credit Cards

How You Use Your Credit Card Should Affect Your Card Choices

Understanding whether you are a revolver or a transactor when it comes to your credit card can help you find right issuer and the best card deals. Here’s how.

In the credit card industry, you are either a transactor or revolver—a shorthand describing how issuers make money off you. Some issuers favor one over the other and tailor their offers to attract their preferred type.

Knowing which bucket you fall into can help you find the issuer that caters to your type and get the best card deals. Here’s how to determine what kind of credit cardholder you are, and which issuers want your type this year.

Transactors vs. Revolvers

Transactors: If you pay off your credit card balance every month, welcome to the transactor tribe, which makes up 29% of all credit cardholders, according to the most recent figures from the American Bankers Association (ABA).

These cardholders are often big spenders with many purchases each month. This is profitable for banks because they collect a transaction fee from merchants every time you swipe your card. To attract transactors, issuers typically offer big bonuses and other monetary incentives on rewards and cash back cards.

Revolvers: If you roll some or all of your balance from one month to the next, you’re considered a revolver—which account for 44% of all cardholders, per the ABA. Issuers make money off of revolvers from interest charges, and at times, late fees. Banks interested in luring new revolvers often advertise no-interest balance transfers.

Who’s Best for Transactors?

Look to American Express, which appears to be doubling down on rewards—a favorite among affluent transactors with high credit scores, historically the issuer’s core customer base. In the fourth quarter, AmEx ramped up its spending on rewards, increasing 12% year-over-year to $1.98 billion, as more cardholders took advantage of rewards benefits—such as airport lounge access and the new $200 credit for Uber rides.

AmEx is also investing more in its Centurion airport lounges— a benefit designed for its Platinum members. A new 15,000-square-foot lounge in New York's JFK airport—its largest lounge to date—is set to open early next year. With the addition, Platinum cardholders will have access to exclusive lounges at two of the five busiest U.S. airports.

Chase is also prioritizing transactors over revolvers. To kick off 2018, the issuer introduced its new co-branded Starbucks Visa card—which caters to those who spend an embarrassing amount every week to quench their upscale caffeine addiction. With a $49 annual fee, the card offers 2,500 Starbucks points for signing up after spending $500 in the first three months. You can find our review of the card here.

This year both Chase and American Express are expected to unveil the new co-branded Starwood credit cards, which are best for transactors. AmEx will provide the super-premium and small business cards, while Chase will issue the mass-consumer and premium-consumer cards.

Who’s Aiming at Revolvers?

If you’re a Citi loyalist, but also a revolver, get in sooner rather than later. The issuer—which provides some of the longest 0% APR periods in the industry—is ready to pull back on these offers. Citi wants to adjust its new-cardholder strategy as interest rates rise, including "shortening or eliminating the promotional period on certain offers,” Joseph Gerspach, the company’s chief financial officer, said during Citi’s fourth-quarter earnings call in December. The issuer has already reduced the no-interest periods on some cards from 21 months to 18 months.

The same can’t be said for Discover, which is holding firm on its strategy to target revolvers. "I think some of the craziness probably has passed. And we frankly couldn’t really understand why everyone else seems to be going after transactors and paying up higher rewards," said Discover CEO David Nelms in the company’s third-quarter earnings call. "Focusing on prime revolvers has been our strategy over a decade, so we’re continuing to pursue that consistent strategy." Bottom line: Don’t consumers expect any big shifts in Discover’s bonuses or rewards in 2018.

Janna Herron

Janna is a Senior Writer at ValuePenguin covering banking, credit cards and credit scores. She has spent more than a decade writing and reporting on personal finance, real estate and business, and has received three journalism awards for her work.

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