Rewarding Cards: The Generational Differences and Rich v Poor

by Robert McGarvey

Baby Boomers, stand back. We – and of course I am a Boomer – no longer are the leading consumers and cravers of credit card rewards. Guess what, we are not in second place either.

This is according to Morning Consult data that looks at share of an age group that belong to a travel rewards/loyalty program. That could be anything from belonging to Marriott’s Bonvoy program to collecting airline miles through accumulating Amex rewards points.

Personally I do all three.

But I am also aware that we are speeding on fast forward into a generational shift in the travel business where Boomers, who have been the industry’s stars for perhaps 40 years, are moving to the sidelines.

We will not be replaced by Gen X. Just not enough of them and, apparently, they are not avid collectors of points. Morning Consult says just 38% of Gen X (born 1965-1980) belong to a travel rewards program. That puts them in fourth, last, place in the generational claim to be top of the travel pile.

Where are Boomers (1946-1964)? Third place with 41% of us belonging to a travel rewards program.

Gen Z (1997-2012) has 42% participation.

And hats off to Millennials (1981-1996) where 48% – almost half – are in a travel rewards program.

Why? eMarketer observes that travel costs are up significantly “so travelers will likely turn to loyalty and rewards programs even more for perks or discounts.”

And costs are in fact up. Per NerdWallet, “the overall cost of travel is up 18% compared with April 2019 and up 2% versus the same month in 2022.”

Some prices are up a lot more: “U.S.-to-Europe tickets are averaging $1,300 round trip, per deal-spotting site Hopper — a 50% jump from last year. Tickets to Asia, meanwhile, are up a staggering 70% compared to pre-pandemic figures, averaging nearly $2,000 round trip,” reported Axios.

It’s a no brainer to use points and miles – especially for international airfares – this year.

But you know the question that is not addressed in these data: how many different travel rewards programs do individuals belong to? I can think of three airline programs I belong to (and a fourth where I have a handful of orphaned miles), two hotel programs (Hilton and Bonvoy where I have elite status in both via Amex Plat), I have two airline credit cards, of course there’s Amex Plat and that rewards program, there’s a stash of points at Diner’s Club. That’s nine that I am aware of and I am sure there are memberships that I have forgotten.

My point is that maybe Boomers still are the princes and princesses of rewards travel because we just might belong to a lot more programs than members of other generations and we almost certainly have bigger stashes of accumulated points and miles, simply because we have been at this a lot longer.

But there is one more data point to mull: Morning Consult data show a powerful correlation between participation in a travel rewards program and income. Makes sense. Travel for business usually is associated with higher income jobs and leisure travel is the province of those with discretionary income. Why collect miles and points if you don’t travel?

Just 29% of us with incomes below $50,000 belong to a travel rewards program. But 76% with incomes of $100k or more do belong.

Of course then there is the uglier side of this discussion where many economists say that it’s the poor who pay for the credit cards rewards of the rich. Aaron Klein, a senior fellow in economics at the Brooking Institute, is quoted in Vox: “The American payment system has evolved into a reverse Robin Hood whereby middle-class and working-class Americans who pay with a debit card, prepaid card, or cash are subsidizing the wealthy, who pay less for everything.”

And that’s because it’s the rich who reap the rewards — a fact shown by the Morning Consult numbers. All of us pay higher prices to pay for the credit card rewards and it mainly are the rich who get them.